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Building on their success in Indian IBC landscape, insolvency professionals (IPs) should expand overseas, Ravi Mital, Chairman, IBBI has said.
“We in India have done a far better job than most countries. Just as ICAI aspires to become International Institute of Chartered Accountants, our resolution professionals must take up projects in other countries. Because you (IPs) have done better than what others have done,” Mital said at 2nd edition of ‘RESOLVE 2024’ in the capital.
Mital cited the recent real estate crisis (meltdown) in China and how they were finding it difficult to recover while Indian IPs have smoothly resolved real estate related distress assets worth ₹20,000 crore in India without any hiccups.
Mital urged IPs to be as innovative as possible, noting that no one would take action for “genuine innovations”. He exhorted IPs to increase the use of “part resolutions”.
IBBI chief underscored the need to improve quality of “Information Memorandums” and asked IPs to be as transparent as possible. “ The more transparent we are, better recovery results will be obtained”, Mital added.
India currently has 4,600 IPs with 55 per cent of them being chartered accountants.
Insolvency Bankruptcy Code (IBC), which will complete eight years of existence in next few months, has directly returned ₹ 3.4-lakh crore to creditors. The recovery to creditors stood at about 32 per cent of over ₹10-lakh crore of assets claimed.
When looked at as a percentage of “fair value” (when the company comes to IBC), the percentage stood at over 80 per cent and it is 65-70 per cent as percentage of liquidation value. “We are not doing badly. But we cannot say we cannot do better. I am sure if we work better we can improve recovery rate from 32 per cent to 40 per cent”, Mital added.
This direct amount returned of ₹3.4-lakh crore is about 25 per cent of the total NPA level of ₹12-lakh crore seen in the banking system in 2017.
Mital highlighted that the creditor-in-control system ushered in by IBC has changed Indian banking system.
New record
Mital said that IBC ecosystem is on course to create another record in terms of number of resolutions approved by NCLT. The year 2023-24 has seen an unprecedented surge in approval of resolution plans 269 as compared with 189 approvals in previous fiscal. This fiscal year could see further improvement on total number of resolutions approved, Mital said.
Billed as the largest insolvency convention in India, RESOLVE 2024 was a two day international conference with theme “Enabling Resolution Maximizing Value”. The main aim is to foster the adoption of global best practices in the industry.
The event saw over 40 eminent speakers across 14 technical sessions covering the most relevant and contemporary topics in the space of insolvency resolution.
In the inaugural session Ashok Bhushan, Chairperson, National Company Law Appellate Tribunal (NCLAT) said that the landscape of insolvency and bankruptcy has evolved significantly. “In the dynamic economy, the accountancy professionals must stay ahead of the curve and learn to navigate the evolving landscape of insolvency and valuation with confidence and expertise,” Bhushan added.
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