New Delhi, May 15 (PTI) The new Bankruptcy Law will fast- track recovery of dues from defaulters and employees will be first in line to get their share from liquidation of assets if a company goes belly-up, says Union Minister Jayant Sinha.

Besides, it would also bring down drastically the time taken to wind up a sick company while making the entire process much easier, the Minister of State for Finance said.

"The bankruptcy law is going to enable the recovery process to move much more smoothly and effectively," Sinha told PTI here.

Both Houses of Parliament within days passed the Insolvency and Bankruptcy Code last week to unify more than four overlapping sets of about a century-old laws to improve ease of doing business in the country.

The new law empowers employees, creditors and shareholders to initiate winding up process at the first sign of financial stress like a serious default on repayment of a bank loan.

Once they trigger the clause, the matter goes to a 180-day resolution process, which can be extended by another 90 days by the adjudicator.

The new law also protects the workers in case of insolvency by giving first priority on paying their salaries for up to 24 months from the liquidation of assets.

"Employees' rights (and) creditors' rights have been dramatically strengthened and as a result, if indeed there is a default event, employees are first in line to be able to secure (there rights)," Sinha said.

It also provides for setting up of a new entity, the Insolvency and Bankruptcy Board of India, which will regulate insolvency professionals and information companies - those which will store all the credit information of corporates.

Sinha said the entire architecture and infrastructure for insolvency will be in place within the next 12 months.