Law and Economics of the Bankruptcy Code of India: A Comparative Analysis with US Law
The Insolvency and Bankruptcy Code (IBC), 2016, of India, stands as a transformative reform aimed at streamlining and expediting insolvency resolution. Its introduction marked a significant shift from a "debtor-in-possession" to a "creditor-in-control" regime, with a paramount focus on maximizing asset value and fostering responsible credit behavior. This note delves into the economic underpinnings of the IBC, drawing insights from Cooter and Ulen's principles of law and economics, and offers a comparative perspective with US bankruptcy law, highlighting recent judicial developments in both jurisdictions. Economic Foundations of the IBC, 2016: Efficiency and Pareto Improvements The IBC is deeply rooted in principles of economic efficiency, seeking to address the fragmentation and inefficiencies that plagued India's pre-IBC insolvency regime. Cooter and Ulen's framework of efficiency (maximizing societal welfare from scarce resources) and distribution ...