The issue of corporate insolvency has attained great significance with the globalization of economy. In recent times, there has been a massive growth of retail loans to individuals, housing loans and credit card users in India. In this background, a need has been felt for bringing about reforms in the sphere of law of insolvency. The basic objectives of corporate insolvency are to restore the debtor company to profitable trading where it is practicable; to maximize the return to creditors as a whole where the company itself cannot be saved; to establish a fair and equitable system for the ranking of claims and the distribution of assets among creditors, involving a redistribution of rights; to provide a mechanism by which the causes of failure can be identified and those guilty of mismanagement brought to book; placement of the assets of the company under external control; substitution of collective action for individual pursuits; avoidance of certain transactions and fraudulent conveyances, dissolution and winding up etc. Under the provisions of the Companies Act, 1956, a company is liable to be wound up when is unable to pay its debts. A company is said to be unable to pay its debt and the Registrar of Companies makes out a case of inability to pay debts when a company's entire capital is lost in heavy losses and no accounts are prepared and filed and no business is done for one year. The court established under Companies Act has the jurisdiction to deal with corporate insolvency. The Board for Industrial & Financial Reconstruction deals with the distributive and rehabilitative aspects of insolvency. When BIFR finds that company is not capable of revival, it sends a report to the court with a suggestion to commence insolvency proceedings in accordance with the Companies Act. Upon winding up of the company, the custody of the company's property and its vesting is transferred to the Official Liquidator.