“Since the introduction of the Insolvency and Bankruptcy Code in 2016, India has made continuous progress in the insolvency process, in terms of its speed, recovery and cost. IBC has brought about significant behavioural change and responsibility in the attitudes of the borrowers as well as promoters and has improved the business environment. Till date the Code has undergone six amendments to strengthen the framework”, mentioned Shri Rajesh Verma, Secretary, Ministry of Corporate Affairs, while addressing at the CII National Conference on ‘5-Years of the IBC, 2016 & Way Forward’ organised today.
Shri Verma stated that the Ministry of Corporate Affairs is having regular interactions with the stakeholders in order to strengthen IBC, 2016 to improve ease of doing business. Before the introduction of the Code, Indian businesses did not have the freedom to exit and resolve insolvency easily. IBC has transformed India’s insolvency framework. IBC was enacted to consolidate and amend laws relating to reorganisation and insolvency resolution of debtors in a time-bound manner, promote entrepreneurship, availability of credit and to balance the interest of all stakeholders.
Shri Verma informed that till July 2021, more than 4570 cases were admitted for corporate insolvency resolution. Out of these 657 cases have been closed, 466 cases have been withdrawn, 404 cases have resulted in resolution with realisable amount of Rs 2.5 Lakh Crores and 1371 cases have resulted in liquidation. In addition to these 17837 cases involving an amount of more than Rs 5.5 Lakh Crore have been disposed off at pre-admission stage. The Ministry of Corporate Affairs is creating a cadre of young and trained insolvency professionals through the Graduate Insolvency Programmes, he added.
Addressing the session, Mr Chandrajit Banerjee, Director General, CII, said that the government has made persistent efforts in the last few years for simplification and rationalization of the existing rules and introduction of information technology to make governance more efficient. The government’s bold decision to introduce IBC,2016 not only facilitated the increase in rankings in terms of Ease of Doing Business but also redefined the way insolvency proceedings and restructuring are perceived amongst industry. Mr Banerjee further mentioned that as IBC, 2016 completes 5 years of implementation, it has provided a well-defined and hassle-free resolution mechanism for dealing with the rising levels of distressed debt in the country. The Code has helped in streamlining complicated and conflicting laws and creating a unified resolution framework that addresses the gaps and inconsistencies of its previous version.
Mr Koushik Chatterjee, Executive Director & CFO, Tata Steel Limited stated that every major economy in the world has a structured insolvency management process. India possibly started late in 2016, however the law is significantly robust and changes that happened soon after the enactment due to the proactive stance of the Government has been remarkable. Mr Chatterjee said that IBC, 2016 helped by not only bringing in a transparent process but also helped in the price discovery. He suggested that the focus now needs to be on maintaining the timeline in the resolution process. The need of the hour is to have some form of legislative positioning so that frivolous litigation is avoided. It would be also important to explore if one can get into online auction as a part of the value discovery process, he stated.
Mr Shardul Shroff, Chairman, CII Task Force on Insolvency & Bankruptcy Code and Executive Chairman, Shardul Amarchand Mangaldas & Co. stated that the history of the evolution of the IBC, 2016 suggests that a top-down approach has been followed to test the law and constitutionality of the Code. The Code has empowered the Creditors more than the Debtors. The IBC, 2016 is a dynamic law evolving to meet emerging needs of the stakeholders to further its objective of the Code. IBC,2016 has passed the Constitutional muster and with every challenge, it has come out with stronger roots. However, further focus is needed on the implementation part. He mentioned that implementation of cross-border insolvency law can prove to be a game changer, however, it is a complex area which relates to resolving insolvency of companies which have a global footprint and have assets spread across the globe and therefore needs greater focus.
27 August 2021