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The Insolvency and Bankruptcy Code, 2016 (IBC) enacted on May 28, 2016, against the backdrop of mounting non-performing loans, with a view to establishing a consolidated framework for insolvency resolution of corporations, partnership firms and individuals in a time-bound manner, seeks to tackle the non-performing asset (NPA) problem in two ways. Firstly, behavioural change on part of the debtors to ensure sound business decision-making and prevent business failures is encouraged. Secondly, it envisages a process through which financially ailing corporate entities are put through a rehabilitation process and brought back up on their feet. Under the IBC, the Indian insolvency regime shifted from ‘debtor-in-possession’ to ‘creditor-in-control’. The creditor-in-control model hands control of the debtor to its creditors and relies upon the managerial skills of a newly appointed management to take over an ailing company and ensure business continuance. The Apex Court in Swiss Ribbons Vs Union of India, has held that the core objective of the IBC is to ensure revival and continuation of the corporate debtor. Thus, the IBC has a larger public-welfare consideration in play.The IBC sets out three classes of persons who can trigger the corporate insolvency resolution process (CIRP) – financial creditors, operational creditors and corporate debtors. For an operational debtor, the Apex Court in Mobilox Innovations Vs Kirusa Software observed that the operational debt should be free from any pre-existing dispute which cannot be dealt with summarily in insolvency proceedings. In terms of liability, in Lalit Kumar Jain Vs Union of India, the Supreme Court clarified that the liability of a guarantor was coextensive with that of the principal debtor. Accordingly, parallel proceedings could be initiated against the guarantors.Perhaps the most important aspect under the IBC is the timeliness of insolvency resolution. The Supreme Court in Kridhan Infrastructure Vs Venketesan Sankaranarayan, observed that the insolvency resolution should not suffer from an indefinite delay in complete abeyance of the timelines fixed under the IBC.Once an insolvency petition is admitted, a moratorium is introduced. In P Mohanraj Vs Shah Brothers Ispat, the Supreme Court held that a moratorium prohibits the institution and continuation of any proceedings against the corporate debtor during the CIRP. A moratorium is meant to prevent further depletion of the corporate debtor’s assets and hence acts as a ‘shield’, but it does not protect the key managerial personnel of the corporate debtor who was responsible for the insolvency.Similarly, in Phoenix ARC Vs Spade Financial Services, it was observed that the IBC provides that any related party of the corporate debtor does not have the right to be part of a committee of creditors (CoC). The object of such a provision is to prevent the decisions of the CoC from being sabotaged by related parties of the corporate debtor.Q. Which of the following statements are correct with respect to moratorium?a. Period when no judicial proceedings for recovery, sale or transfer of assets etc. can be instituted or continued against the corporate debtorb. Acts as a shield and prevents further depletion of the corporate debtor’s assetsc. Prohibits the institution and continuation of any proceedings against the corporate debtor during the CIRPd. Period when the financial creditor, operational creditor etc. can institute a case against the corporate debtora)All (a), (b) & (c)b)Both (a) & (b)c)Both (a) & (c)d)Both (b) & (c)Correct answer is option 'A'. Can you explain this answer? for CLAT 2025 is part of CLAT preparation. The Question and answers have been prepared according to the CLAT exam syllabus. Information about The Insolvency and Bankruptcy Code, 2016 (IBC) enacted on May 28, 2016, against the backdrop of mounting non-performing loans, with a view to establishing a consolidated framework for insolvency resolution of corporations, partnership firms and individuals in a time-bound manner, seeks to tackle the non-performing asset (NPA) problem in two ways. Firstly, behavioural change on part of the debtors to ensure sound business decision-making and prevent business failures is encouraged. Secondly, it envisages a process through which financially ailing corporate entities are put through a rehabilitation process and brought back up on their feet. Under the IBC, the Indian insolvency regime shifted from ‘debtor-in-possession’ to ‘creditor-in-control’. The creditor-in-control model hands control of the debtor to its creditors and relies upon the managerial skills of a newly appointed management to take over an ailing company and ensure business continuance. The Apex Court in Swiss Ribbons Vs Union of India, has held that the core objective of the IBC is to ensure revival and continuation of the corporate debtor. Thus, the IBC has a larger public-welfare consideration in play.The IBC sets out three classes of persons who can trigger the corporate insolvency resolution process (CIRP) – financial creditors, operational creditors and corporate debtors. For an operational debtor, the Apex Court in Mobilox Innovations Vs Kirusa Software observed that the operational debt should be free from any pre-existing dispute which cannot be dealt with summarily in insolvency proceedings. In terms of liability, in Lalit Kumar Jain Vs Union of India, the Supreme Court clarified that the liability of a guarantor was coextensive with that of the principal debtor. Accordingly, parallel proceedings could be initiated against the guarantors.Perhaps the most important aspect under the IBC is the timeliness of insolvency resolution. The Supreme Court in Kridhan Infrastructure Vs Venketesan Sankaranarayan, observed that the insolvency resolution should not suffer from an indefinite delay in complete abeyance of the timelines fixed under the IBC.Once an insolvency petition is admitted, a moratorium is introduced. In P Mohanraj Vs Shah Brothers Ispat, the Supreme Court held that a moratorium prohibits the institution and continuation of any proceedings against the corporate debtor during the CIRP. A moratorium is meant to prevent further depletion of the corporate debtor’s assets and hence acts as a ‘shield’, but it does not protect the key managerial personnel of the corporate debtor who was responsible for the insolvency.Similarly, in Phoenix ARC Vs Spade Financial Services, it was observed that the IBC provides that any related party of the corporate debtor does not have the right to be part of a committee of creditors (CoC). The object of such a provision is to prevent the decisions of the CoC from being sabotaged by related parties of the corporate debtor.Q. Which of the following statements are correct with respect to moratorium?a. Period when no judicial proceedings for recovery, sale or transfer of assets etc. can be instituted or continued against the corporate debtorb. Acts as a shield and prevents further depletion of the corporate debtor’s assetsc. Prohibits the institution and continuation of any proceedings against the corporate debtor during the CIRPd. Period when the financial creditor, operational creditor etc. can institute a case against the corporate debtora)All (a), (b) & (c)b)Both (a) & (b)c)Both (a) & (c)d)Both (b) & (c)Correct answer is option 'A'. Can you explain this answer? covers all topics & solutions for CLAT 2025 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for The Insolvency and Bankruptcy Code, 2016 (IBC) enacted on May 28, 2016, against the backdrop of mounting non-performing loans, with a view to establishing a consolidated framework for insolvency resolution of corporations, partnership firms and individuals in a time-bound manner, seeks to tackle the non-performing asset (NPA) problem in two ways. Firstly, behavioural change on part of the debtors to ensure sound business decision-making and prevent business failures is encouraged. Secondly, it envisages a process through which financially ailing corporate entities are put through a rehabilitation process and brought back up on their feet. Under the IBC, the Indian insolvency regime shifted from ‘debtor-in-possession’ to ‘creditor-in-control’. The creditor-in-control model hands control of the debtor to its creditors and relies upon the managerial skills of a newly appointed management to take over an ailing company and ensure business continuance. The Apex Court in Swiss Ribbons Vs Union of India, has held that the core objective of the IBC is to ensure revival and continuation of the corporate debtor. Thus, the IBC has a larger public-welfare consideration in play.The IBC sets out three classes of persons who can trigger the corporate insolvency resolution process (CIRP) – financial creditors, operational creditors and corporate debtors. For an operational debtor, the Apex Court in Mobilox Innovations Vs Kirusa Software observed that the operational debt should be free from any pre-existing dispute which cannot be dealt with summarily in insolvency proceedings. In terms of liability, in Lalit Kumar Jain Vs Union of India, the Supreme Court clarified that the liability of a guarantor was coextensive with that of the principal debtor. Accordingly, parallel proceedings could be initiated against the guarantors.Perhaps the most important aspect under the IBC is the timeliness of insolvency resolution. The Supreme Court in Kridhan Infrastructure Vs Venketesan Sankaranarayan, observed that the insolvency resolution should not suffer from an indefinite delay in complete abeyance of the timelines fixed under the IBC.Once an insolvency petition is admitted, a moratorium is introduced. In P Mohanraj Vs Shah Brothers Ispat, the Supreme Court held that a moratorium prohibits the institution and continuation of any proceedings against the corporate debtor during the CIRP. A moratorium is meant to prevent further depletion of the corporate debtor’s assets and hence acts as a ‘shield’, but it does not protect the key managerial personnel of the corporate debtor who was responsible for the insolvency.Similarly, in Phoenix ARC Vs Spade Financial Services, it was observed that the IBC provides that any related party of the corporate debtor does not have the right to be part of a committee of creditors (CoC). The object of such a provision is to prevent the decisions of the CoC from being sabotaged by related parties of the corporate debtor.Q. Which of the following statements are correct with respect to moratorium?a. Period when no judicial proceedings for recovery, sale or transfer of assets etc. can be instituted or continued against the corporate debtorb. Acts as a shield and prevents further depletion of the corporate debtor’s assetsc. Prohibits the institution and continuation of any proceedings against the corporate debtor during the CIRPd. Period when the financial creditor, operational creditor etc. can institute a case against the corporate debtora)All (a), (b) & (c)b)Both (a) & (b)c)Both (a) & (c)d)Both (b) & (c)Correct answer is option 'A'. Can you explain this answer?.

Solutions for The Insolvency and Bankruptcy Code, 2016 (IBC) enacted on May 28, 2016, against the backdrop of mounting non-performing loans, with a view to establishing a consolidated framework for insolvency resolution of corporations, partnership firms and individuals in a time-bound manner, seeks to tackle the non-performing asset (NPA) problem in two ways. Firstly, behavioural change on part of the debtors to ensure sound business decision-making and prevent business failures is encouraged. Secondly, it envisages a process through which financially ailing corporate entities are put through a rehabilitation process and brought back up on their feet. Under the IBC, the Indian insolvency regime shifted from ‘debtor-in-possession’ to ‘creditor-in-control’. The creditor-in-control model hands control of the debtor to its creditors and relies upon the managerial skills of a newly appointed management to take over an ailing company and ensure business continuance. The Apex Court in Swiss Ribbons Vs Union of India, has held that the core objective of the IBC is to ensure revival and continuation of the corporate debtor. Thus, the IBC has a larger public-welfare consideration in play.The IBC sets out three classes of persons who can trigger the corporate insolvency resolution process (CIRP) – financial creditors, operational creditors and corporate debtors. For an operational debtor, the Apex Court in Mobilox Innovations Vs Kirusa Software observed that the operational debt should be free from any pre-existing dispute which cannot be dealt with summarily in insolvency proceedings. In terms of liability, in Lalit Kumar Jain Vs Union of India, the Supreme Court clarified that the liability of a guarantor was coextensive with that of the principal debtor. Accordingly, parallel proceedings could be initiated against the guarantors.Perhaps the most important aspect under the IBC is the timeliness of insolvency resolution. The Supreme Court in Kridhan Infrastructure Vs Venketesan Sankaranarayan, observed that the insolvency resolution should not suffer from an indefinite delay in complete abeyance of the timelines fixed under the IBC.Once an insolvency petition is admitted, a moratorium is introduced. In P Mohanraj Vs Shah Brothers Ispat, the Supreme Court held that a moratorium prohibits the institution and continuation of any proceedings against the corporate debtor during the CIRP. A moratorium is meant to prevent further depletion of the corporate debtor’s assets and hence acts as a ‘shield’, but it does not protect the key managerial personnel of the corporate debtor who was responsible for the insolvency.Similarly, in Phoenix ARC Vs Spade Financial Services, it was observed that the IBC provides that any related party of the corporate debtor does not have the right to be part of a committee of creditors (CoC). The object of such a provision is to prevent the decisions of the CoC from being sabotaged by related parties of the corporate debtor.Q. Which of the following statements are correct with respect to moratorium?a. Period when no judicial proceedings for recovery, sale or transfer of assets etc. can be instituted or continued against the corporate debtorb. Acts as a shield and prevents further depletion of the corporate debtor’s assetsc. Prohibits the institution and continuation of any proceedings against the corporate debtor during the CIRPd. Period when the financial creditor, operational creditor etc. can institute a case against the corporate debtora)All (a), (b) & (c)b)Both (a) & (b)c)Both (a) & (c)d)Both (b) & (c)Correct answer is option 'A'. Can you explain this answer? in English & in Hindi are available as part of our courses for CLAT. Download more important topics, notes, lectures and mock test series for CLAT Exam by signing up for free.

Here you can find the meaning of The Insolvency and Bankruptcy Code, 2016 (IBC) enacted on May 28, 2016, against the backdrop of mounting non-performing loans, with a view to establishing a consolidated framework for insolvency resolution of corporations, partnership firms and individuals in a time-bound manner, seeks to tackle the non-performing asset (NPA) problem in two ways. Firstly, behavioural change on part of the debtors to ensure sound business decision-making and prevent business failures is encouraged. Secondly, it envisages a process through which financially ailing corporate entities are put through a rehabilitation process and brought back up on their feet. Under the IBC, the Indian insolvency regime shifted from ‘debtor-in-possession’ to ‘creditor-in-control’. The creditor-in-control model hands control of the debtor to its creditors and relies upon the managerial skills of a newly appointed management to take over an ailing company and ensure business continuance. The Apex Court in Swiss Ribbons Vs Union of India, has held that the core objective of the IBC is to ensure revival and continuation of the corporate debtor. Thus, the IBC has a larger public-welfare consideration in play.The IBC sets out three classes of persons who can trigger the corporate insolvency resolution process (CIRP) – financial creditors, operational creditors and corporate debtors. For an operational debtor, the Apex Court in Mobilox Innovations Vs Kirusa Software observed that the operational debt should be free from any pre-existing dispute which cannot be dealt with summarily in insolvency proceedings. In terms of liability, in Lalit Kumar Jain Vs Union of India, the Supreme Court clarified that the liability of a guarantor was coextensive with that of the principal debtor. Accordingly, parallel proceedings could be initiated against the guarantors.Perhaps the most important aspect under the IBC is the timeliness of insolvency resolution. The Supreme Court in Kridhan Infrastructure Vs Venketesan Sankaranarayan, observed that the insolvency resolution should not suffer from an indefinite delay in complete abeyance of the timelines fixed under the IBC.Once an insolvency petition is admitted, a moratorium is introduced. In P Mohanraj Vs Shah Brothers Ispat, the Supreme Court held that a moratorium prohibits the institution and continuation of any proceedings against the corporate debtor during the CIRP. A moratorium is meant to prevent further depletion of the corporate debtor’s assets and hence acts as a ‘shield’, but it does not protect the key managerial personnel of the corporate debtor who was responsible for the insolvency.Similarly, in Phoenix ARC Vs Spade Financial Services, it was observed that the IBC provides that any related party of the corporate debtor does not have the right to be part of a committee of creditors (CoC). The object of such a provision is to prevent the decisions of the CoC from being sabotaged by related parties of the corporate debtor.Q. Which of the following statements are correct with respect to moratorium?a. Period when no judicial proceedings for recovery, sale or transfer of assets etc. can be instituted or continued against the corporate debtorb. Acts as a shield and prevents further depletion of the corporate debtor’s assetsc. Prohibits the institution and continuation of any proceedings against the corporate debtor during the CIRPd. Period when the financial creditor, operational creditor etc. can institute a case against the corporate debtora)All (a), (b) & (c)b)Both (a) & (b)c)Both (a) & (c)d)Both (b) & (c)Correct answer is option 'A'. Can you explain this answer? defined & explained in the simplest way possible. Besides giving the explanation of The Insolvency and Bankruptcy Code, 2016 (IBC) enacted on May 28, 2016, against the backdrop of mounting non-performing loans, with a view to establishing a consolidated framework for insolvency resolution of corporations, partnership firms and individuals in a time-bound manner, seeks to tackle the non-performing asset (NPA) problem in two ways. Firstly, behavioural change on part of the debtors to ensure sound business decision-making and prevent business failures is encouraged. Secondly, it envisages a process through which financially ailing corporate entities are put through a rehabilitation process and brought back up on their feet. Under the IBC, the Indian insolvency regime shifted from ‘debtor-in-possession’ to ‘creditor-in-control’. The creditor-in-control model hands control of the debtor to its creditors and relies upon the managerial skills of a newly appointed management to take over an ailing company and ensure business continuance. The Apex Court in Swiss Ribbons Vs Union of India, has held that the core objective of the IBC is to ensure revival and continuation of the corporate debtor. Thus, the IBC has a larger public-welfare consideration in play.The IBC sets out three classes of persons who can trigger the corporate insolvency resolution process (CIRP) – financial creditors, operational creditors and corporate debtors. For an operational debtor, the Apex Court in Mobilox Innovations Vs Kirusa Software observed that the operational debt should be free from any pre-existing dispute which cannot be dealt with summarily in insolvency proceedings. In terms of liability, in Lalit Kumar Jain Vs Union of India, the Supreme Court clarified that the liability of a guarantor was coextensive with that of the principal debtor. Accordingly, parallel proceedings could be initiated against the guarantors.Perhaps the most important aspect under the IBC is the timeliness of insolvency resolution. The Supreme Court in Kridhan Infrastructure Vs Venketesan Sankaranarayan, observed that the insolvency resolution should not suffer from an indefinite delay in complete abeyance of the timelines fixed under the IBC.Once an insolvency petition is admitted, a moratorium is introduced. In P Mohanraj Vs Shah Brothers Ispat, the Supreme Court held that a moratorium prohibits the institution and continuation of any proceedings against the corporate debtor during the CIRP. A moratorium is meant to prevent further depletion of the corporate debtor’s assets and hence acts as a ‘shield’, but it does not protect the key managerial personnel of the corporate debtor who was responsible for the insolvency.Similarly, in Phoenix ARC Vs Spade Financial Services, it was observed that the IBC provides that any related party of the corporate debtor does not have the right to be part of a committee of creditors (CoC). The object of such a provision is to prevent the decisions of the CoC from being sabotaged by related parties of the corporate debtor.Q. Which of the following statements are correct with respect to moratorium?a. Period when no judicial proceedings for recovery, sale or transfer of assets etc. can be instituted or continued against the corporate debtorb. Acts as a shield and prevents further depletion of the corporate debtor’s assetsc. Prohibits the institution and continuation of any proceedings against the corporate debtor during the CIRPd. Period when the financial creditor, operational creditor etc. can institute a case against the corporate debtora)All (a), (b) & (c)b)Both (a) & (b)c)Both (a) & (c)d)Both (b) & (c)Correct answer is option 'A'. Can you explain this answer?, a detailed solution for The Insolvency and Bankruptcy Code, 2016 (IBC) enacted on May 28, 2016, against the backdrop of mounting non-performing loans, with a view to establishing a consolidated framework for insolvency resolution of corporations, partnership firms and individuals in a time-bound manner, seeks to tackle the non-performing asset (NPA) problem in two ways. Firstly, behavioural change on part of the debtors to ensure sound business decision-making and prevent business failures is encouraged. Secondly, it envisages a process through which financially ailing corporate entities are put through a rehabilitation process and brought back up on their feet. Under the IBC, the Indian insolvency regime shifted from ‘debtor-in-possession’ to ‘creditor-in-control’. The creditor-in-control model hands control of the debtor to its creditors and relies upon the managerial skills of a newly appointed management to take over an ailing company and ensure business continuance. The Apex Court in Swiss Ribbons Vs Union of India, has held that the core objective of the IBC is to ensure revival and continuation of the corporate debtor. Thus, the IBC has a larger public-welfare consideration in play.The IBC sets out three classes of persons who can trigger the corporate insolvency resolution process (CIRP) – financial creditors, operational creditors and corporate debtors. For an operational debtor, the Apex Court in Mobilox Innovations Vs Kirusa Software observed that the operational debt should be free from any pre-existing dispute which cannot be dealt with summarily in insolvency proceedings. In terms of liability, in Lalit Kumar Jain Vs Union of India, the Supreme Court clarified that the liability of a guarantor was coextensive with that of the principal debtor. Accordingly, parallel proceedings could be initiated against the guarantors.Perhaps the most important aspect under the IBC is the timeliness of insolvency resolution. The Supreme Court in Kridhan Infrastructure Vs Venketesan Sankaranarayan, observed that the insolvency resolution should not suffer from an indefinite delay in complete abeyance of the timelines fixed under the IBC.Once an insolvency petition is admitted, a moratorium is introduced. In P Mohanraj Vs Shah Brothers Ispat, the Supreme Court held that a moratorium prohibits the institution and continuation of any proceedings against the corporate debtor during the CIRP. A moratorium is meant to prevent further depletion of the corporate debtor’s assets and hence acts as a ‘shield’, but it does not protect the key managerial personnel of the corporate debtor who was responsible for the insolvency.Similarly, in Phoenix ARC Vs Spade Financial Services, it was observed that the IBC provides that any related party of the corporate debtor does not have the right to be part of a committee of creditors (CoC). The object of such a provision is to prevent the decisions of the CoC from being sabotaged by related parties of the corporate debtor.Q. Which of the following statements are correct with respect to moratorium?a. Period when no judicial proceedings for recovery, sale or transfer of assets etc. can be instituted or continued against the corporate debtorb. Acts as a shield and prevents further depletion of the corporate debtor’s assetsc. Prohibits the institution and continuation of any proceedings against the corporate debtor during the CIRPd. Period when the financial creditor, operational creditor etc. can institute a case against the corporate debtora)All (a), (b) & (c)b)Both (a) & (b)c)Both (a) & (c)d)Both (b) & (c)Correct answer is option 'A'. Can you explain this answer? has been provided alongside types of The Insolvency and Bankruptcy Code, 2016 (IBC) enacted on May 28, 2016, against the backdrop of mounting non-performing loans, with a view to establishing a consolidated framework for insolvency resolution of corporations, partnership firms and individuals in a time-bound manner, seeks to tackle the non-performing asset (NPA) problem in two ways. Firstly, behavioural change on part of the debtors to ensure sound business decision-making and prevent business failures is encouraged. Secondly, it envisages a process through which financially ailing corporate entities are put through a rehabilitation process and brought back up on their feet. Under the IBC, the Indian insolvency regime shifted from ‘debtor-in-possession’ to ‘creditor-in-control’. The creditor-in-control model hands control of the debtor to its creditors and relies upon the managerial skills of a newly appointed management to take over an ailing company and ensure business continuance. The Apex Court in Swiss Ribbons Vs Union of India, has held that the core objective of the IBC is to ensure revival and continuation of the corporate debtor. Thus, the IBC has a larger public-welfare consideration in play.The IBC sets out three classes of persons who can trigger the corporate insolvency resolution process (CIRP) – financial creditors, operational creditors and corporate debtors. For an operational debtor, the Apex Court in Mobilox Innovations Vs Kirusa Software observed that the operational debt should be free from any pre-existing dispute which cannot be dealt with summarily in insolvency proceedings. In terms of liability, in Lalit Kumar Jain Vs Union of India, the Supreme Court clarified that the liability of a guarantor was coextensive with that of the principal debtor. Accordingly, parallel proceedings could be initiated against the guarantors.Perhaps the most important aspect under the IBC is the timeliness of insolvency resolution. The Supreme Court in Kridhan Infrastructure Vs Venketesan Sankaranarayan, observed that the insolvency resolution should not suffer from an indefinite delay in complete abeyance of the timelines fixed under the IBC.Once an insolvency petition is admitted, a moratorium is introduced. In P Mohanraj Vs Shah Brothers Ispat, the Supreme Court held that a moratorium prohibits the institution and continuation of any proceedings against the corporate debtor during the CIRP. A moratorium is meant to prevent further depletion of the corporate debtor’s assets and hence acts as a ‘shield’, but it does not protect the key managerial personnel of the corporate debtor who was responsible for the insolvency.Similarly, in Phoenix ARC Vs Spade Financial Services, it was observed that the IBC provides that any related party of the corporate debtor does not have the right to be part of a committee of creditors (CoC). The object of such a provision is to prevent the decisions of the CoC from being sabotaged by related parties of the corporate debtor.Q. Which of the following statements are correct with respect to moratorium?a. Period when no judicial proceedings for recovery, sale or transfer of assets etc. can be instituted or continued against the corporate debtorb. Acts as a shield and prevents further depletion of the corporate debtor’s assetsc. Prohibits the institution and continuation of any proceedings against the corporate debtor during the CIRPd. Period when the financial creditor, operational creditor etc. can institute a case against the corporate debtora)All (a), (b) & (c)b)Both (a) & (b)c)Both (a) & (c)d)Both (b) & (c)Correct answer is option 'A'. Can you explain this answer? theory, EduRev gives you an ample number of questions to practice The Insolvency and Bankruptcy Code, 2016 (IBC) enacted on May 28, 2016, against the backdrop of mounting non-performing loans, with a view to establishing a consolidated framework for insolvency resolution of corporations, partnership firms and individuals in a time-bound manner, seeks to tackle the non-performing asset (NPA) problem in two ways. Firstly, behavioural change on part of the debtors to ensure sound business decision-making and prevent business failures is encouraged. Secondly, it envisages a process through which financially ailing corporate entities are put through a rehabilitation process and brought back up on their feet. Under the IBC, the Indian insolvency regime shifted from ‘debtor-in-possession’ to ‘creditor-in-control’. The creditor-in-control model hands control of the debtor to its creditors and relies upon the managerial skills of a newly appointed management to take over an ailing company and ensure business continuance. The Apex Court in Swiss Ribbons Vs Union of India, has held that the core objective of the IBC is to ensure revival and continuation of the corporate debtor. Thus, the IBC has a larger public-welfare consideration in play.The IBC sets out three classes of persons who can trigger the corporate insolvency resolution process (CIRP) – financial creditors, operational creditors and corporate debtors. For an operational debtor, the Apex Court in Mobilox Innovations Vs Kirusa Software observed that the operational debt should be free from any pre-existing dispute which cannot be dealt with summarily in insolvency proceedings. In terms of liability, in Lalit Kumar Jain Vs Union of India, the Supreme Court clarified that the liability of a guarantor was coextensive with that of the principal debtor. Accordingly, parallel proceedings could be initiated against the guarantors.Perhaps the most important aspect under the IBC is the timeliness of insolvency resolution. The Supreme Court in Kridhan Infrastructure Vs Venketesan Sankaranarayan, observed that the insolvency resolution should not suffer from an indefinite delay in complete abeyance of the timelines fixed under the IBC.Once an insolvency petition is admitted, a moratorium is introduced. In P Mohanraj Vs Shah Brothers Ispat, the Supreme Court held that a moratorium prohibits the institution and continuation of any proceedings against the corporate debtor during the CIRP. A moratorium is meant to prevent further depletion of the corporate debtor’s assets and hence acts as a ‘shield’, but it does not protect the key managerial personnel of the corporate debtor who was responsible for the insolvency.Similarly, in Phoenix ARC Vs Spade Financial Services, it was observed that the IBC provides that any related party of the corporate debtor does not have the right to be part of a committee of creditors (CoC). The object of such a provision is to prevent the decisions of the CoC from being sabotaged by related parties of the corporate debtor.Q. Which of the following statements are correct with respect to moratorium?a. Period when no judicial proceedings for recovery, sale or transfer of assets etc. can be instituted or continued against the corporate debtorb. Acts as a shield and prevents further depletion of the corporate debtor’s assetsc. Prohibits the institution and continuation of any proceedings against the corporate debtor during the CIRPd. Period when the financial creditor, operational creditor etc. can institute a case against the corporate debtora)All (a), (b) & (c)b)Both (a) & (b)c)Both (a) & (c)d)Both (b) & (c)Correct answer is option 'A'. Can you explain this answer? tests, examples and also practice CLAT tests.