The introduction of Section 32A to the Insolvency and Bankruptcy Code was the legal equivalent of hitting a reset button for corporate debtors. The clean slate theory is not a new concept, and Section 32A reinforces its application by granting immunity from criminal prosecution to corporate debtors’ post-approval of a resolution plan, provided there is a complete management overhaul. The implementation of this section has faced criticism and raised many questions from critics, scholars and stakeholders about its potential misuse and conflicting nature concerning other legislations, despite this it has been regarded as a bold step by the legislature, displaying an attempt to balance corporate revival and fostering investors’ confidence along with ensuring remedy for wrongdoings done by those in the management of corporate debtors. While the Supreme Court upheld the constitutional validity of Section 32A, stressing the need for economic recovery the critics have raised concerns that it might encourage corporate miscreants. This paper aims to foresee and interpret these ramifications and at the same time suggest some possible solutions. The paper also critiques the established insolvency regime in the country by interpreting the interaction between the Code and legislations such as PMLA, Companies Act, and SEBI Act, having overlapping jurisdiction and how the need for a much clearer interpretation from both the legislative and the judicial perspective awaits.
