Mr Rajesh Verma said the government and regulator IBBI have been constantly making course corrections to fill any loopholes in the insolvency and bankruptcy law.
Mr Rajesh Verma said the government and regulator IBBI have been constantly making course corrections to fill any loopholes in the insolvency and bankruptcy law.
Amid concerns from some quarters that the Bankruptcy Act has led to more liquidations than dissolutions of at-risk assets, on Saturday April 30, 2022, Corporate Affairs Secretary Rajesh Verma advocated the creation of a framework to study the impact of the legislation.
He stressed that the government and regulator IBBI have been constantly making course corrections to fill any loopholes in the Insolvency and Bankruptcy Code (IBC), and also said the law has led to a cultural shift in the dynamics between lenders and borrowers and project promoters have creditors.
The IBC, which came into force in 2016 and has undergone six amendments to date, provides for a time-bound and market-bound settlement of stressed assets.
“Some critics have noted that the IBC has led to more liquidations than dissolutions… There is currently no framework to track the outcome of insolvencies and bankruptcy regimes… It is critical to further study and guide the impact of the insolvency framework created by IBC They do a SWOT analysis to examine (its) strengths and weaknesses,” said Mr. Verma.
Speaking on IBC at the opening session of a two-day conference, he also noted that the World Bank Doing Business indicators, which track IBC performance, have been discontinued.
“Government and regulator IBBI have continually corrected course to respond to loopholes in the Code…While we are agile in implementing the Code’s provisions…it is important that we conduct rigorous and demonstrable-based public policy research” said Mr Verma.
IBBI Chair Ravi Mital said a large number of stressed projects are going into liquidation as they enter very late in the IBC process.
The Insolvency and Bankruptcy Board of India (IBBI) is a key institution in the implementation of the IBC.
While noting that the regulations also target liquidation, he said the regulator will look into the matter.
“In a month or two we will be looking at how to encourage a resolution more than one liquidation. The fundamental essence of IBC is handling a project as a going concern,” he added.
Stressed assets should come into the IBC process as early as possible and liquidation should be the last resort, Mr Mital said.
Minister of State for Corporate Affairs Rao Inderjit Singh said the streamlining of the CIRP (Corporate Insolvency Resolution Process) and the liquidation process will further help consolidate the progress made to secure profits for the economy.
According to him, the IBC has opened up unlimited resolution opportunities and the proposed cross-border insolvency framework will redefine India’s relationship with the rest of the world.
“The framework will handle all requests, such as B. the recognition of foreign bankruptcy proceedings and applications from foreign jurisdictions seeking cooperation in Indian jurisdiction,” he noted.
You were speaking at the International Research Conference on Insolvency and Bankruptcy organized by IBBI and IIM Ahmedabad.
The IBC reports to the Department of Corporate Affairs.
