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The Insolvency and Bankruptcy code is aimed at creating alertness among debtors and creditors and make them more vigilant.
It does not, however, intend to address the issue of corporate fraud or create fear in promoters’ minds, MS Sahoo, Chairperson, Insolvency and Bankruptcy Board of India, said.
Under the new bankruptcy code — which received the President’s assent in May last year — creditors too can initiate the insolvency process. Earlier, it was just debtors.
“The code does not intend to address issues of corporate fraud or create fear in the minds of promoters. It intends to create alertness among debtors and creditors,” he said on the sidelines of an interactive session organised by the Bharat Chamber of Commerce.
According to Sahoo, the code is aimed at being a platform highlighting insolvency and it essentially gives stakeholders a chance to trigger the process.
He, however, did not rule out instances of companies taking legal recourse to prevent the process.
Legal recourse “There are legal issues with every new law. But over a period of time, these gets sorted out. People see the reasoning and rationale behind the laws,” Sahoo maintained.
The bankruptcy code is expected to revitalise the Indian corporate bond market and improve the debt recovery rates. The corporate bond market is pegged at ₹22,19,300 crore. This apart, the code is also expected to help improve the ease of doing business index. India ranks 136th out of 189 countries in the World Bank Index on the ease of resolving insolvency.
According to Sahoo, the government plans to conduct a training programme for insolvency professionals registered under the insolvency and bankruptcy code.
A limited insolvency exam has already been held and it allowed practitioners to obtain provisional registration as insolvency professionals.
The Insolvency and Bankruptcy Board has registered three insolvency professional agencies and 974 insolvency professionals so far.
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