The Role of the Insolvency and Bankruptcy Code in MSME Revival and Sustainable Enterprise Development

Abstract

There is a significant contribution of Micro, Small and Medium Enterprises (MSMEs) in India's economic development but at times financial distress poses threat to the sustainability of MSMEs. The Insolvency and Bankruptcy Code (IBC), 2016 was enacted to create a time-based process of insolvency resolution for revival of business and build the confidence of creditors. The present study aims at exploring the role of IBC in revival of MSMEs and sustainable development of enterprises. A quantitative research design was used, and primary data were gathered from the respondents by structured questionnaire, comprising 384 respondents. IBM SPSS (Version 29) was used to analyze the data using descriptive statistics, Cronbach's Alpha, Pearson correlation, multiple regression and ANOVA. The results show that Insolvency Resolution Efficiency, Creditor Protection, Institutional Support and Business Restructuring Effectiveness have significant positive influence on Sustainable Enterprise Development. Of these, the strongest predictor was Insolvency Resolution Efficiency. Based on the study findings, the revival of MSMEs and sustainability of their business and economic resilience are considerably improved by the effective implementation of the IBC, and it is important to build institutional capacity and speed up the insolvency resolution process.