Introduction
The Board for Industrial and Financial Reconstruction, commonly known as BIFR, was set up to provide rehabilitation to sick industrial companies in India. It was established in 1987 under the Sick Industrial Companies (Special Provisions) Act, 1985.
What is BIFR?
BIFR is a quasi-judicial body that was constituted to identify and revive sick industrial companies in India. The primary objective of BIFR is to prevent the closure of such companies and to ensure their long-term viability.
How does BIFR work?
When a company is identified as sick, it is referred to BIFR for rehabilitation. BIFR then examines the financial and operational status of the company and identifies the reasons for its sickness. Based on its findings, BIFR formulates a revival plan for the company.
What are the powers of BIFR?
BIFR has the power to take over the management of the sick company, to appoint new management, to convert debt into equity, to approve mergers or amalgamations, and to order the sale of assets. It also has the power to declare a company as beyond revival and to initiate liquidation proceedings.
What are the benefits of BIFR?
The primary benefit of BIFR is that it provides a lifeline to sick industrial companies, preventing their closure and saving jobs. It also helps in the efficient use of resources, promotes technological upgradation, and contributes to the growth of the economy.
What are the challenges faced by BIFR?
BIFR has faced several challenges over the years, including delays in the rehabilitation process, lack of cooperation from the management of sick companies, and inadequate resources. There have also been instances of corruption and mismanagement, which have eroded public trust in the institution.
What are the recent developments in BIFR?
In 2016, the government of India passed the Insolvency and Bankruptcy Code, which replaced the Sick Industrial Companies (Special Provisions) Act, 1985. Under the new code, BIFR was abolished, and its functions were transferred to the National Company Law Tribunal (NCLT).
Conclusion
BIFR played a crucial role in the rehabilitation of sick industrial companies in India for several decades. Despite its challenges, it contributed to the growth of the economy and saved many jobs. With the introduction of the Insolvency and Bankruptcy Code, the functions of BIFR have been transferred to the NCLT, which is expected to provide a more efficient and effective mechanism for the resolution of insolvency and bankruptcy cases in India.
