Bankruptcy Fraud and Victim Redressal System: A Time for Change

Abstract

The white-collar crimes in India are either underreported or brushed away due to crony capitalistic tendencies. The non-reporting of such crimes renders the victims without any due redressal, which in turn leads to the catastrophic problem of non-availability of an appropriate legal framework or statistics to address the core problem. This then leads to the bigger problem of victimology with respect to white-collar crimes in India. The world faced a similar problem and rather a peculiar one when the US economy was in shambles due to the subprime crisis wherein the banks, regulatory framework, Congressmen and many other parts of the state machinery were part of the inevitable downward spiral of the US economy. Several decades of investigations and analysis of the subprime crisis of 2008 led to the juxtaposition of bankruptcy fraud and its redressal by victim-oriented schemes. The innocent victims had no remedy left except for prosecution which also was not taken seriously by the Attorney General of the USA. This article, thus, analyses the menace of bankruptcy fraud qua its impact on the victims. The article is divided into three parts: Part I analyses the US bankruptcy legal framework and its victim compensation schemes. Part II analyses the UK position of the same while discussing the recent framework for redressal of Insolvency Services and Victim Compensation. Part III analyses India’s current Insolvency and Bankruptcy Code, 2016, the offences under the said Code and the need for its redressal and a greater need for a victim-oriented scheme in order to protect the framework and the innocent victims suffering due to bankruptcy fraud.