“The speed of resolution process has to improve so as to make the Insolvency and Bankruptcy Code (IBC) more responsive to the large number of corporate debtor cases pending,” said MS Sahoo, Chairman, Insolvency and Bankruptcy Board of India (IBBI).
Delivering the keynote address at the Bangalore Chamber of Industry and Commerce (BCIC) meet on Insolvency Resolution Process Under IBC 2016 via video conferencing, Sahoo said: “The IBC has been one of the biggest reforms the country has undertaken so far, and this grants the ultimate freedom to exit. The outcome has been very encouraging so far, and the disposal has been quite quick. The IBC provides a formal market mechanism to deal with failures,” he added.
Seeks inputs
While seeking inputs from the industry to hasten the process of case disposals, Sahoo said: “Over the last two years, there has been rapid strides made in the implementation of the code. We have the entire ecosystem and regulatory framework in place now. About 1,300 corporate debtor cases have been admitted into the corporate resolution process and, of these, 300 have completed the process either through liquidation or resolution.”
Ashok Kumar Mishra, Member (Technical and HoD), National Company Law Tribunal (NCLT), in his address, pointed out that nearly 12,000 cases have been referred so far, and about one-third were resolved even before the admission stage, given the teeth the code has assumed over the last two years.
“In many cases, a mere reference to the process has brought forward resolution, which would otherwise have not been resolved in normal course.”
He hoped the deliberation will add value to strengthening the process and aid faster resolution.
Moderating a session on ‘The Challenges and Possible Solutions from the Journey So Far’, Radhika Merwin, Senior Deputy Editor, BusinessLine , said: “The intent of appellate authorities in various cases is to remove ambiguity and settle various points of law. But this has led to undue delays in the process. Thus, while IBC is a huge game-changer and has changed the credit behaviour of borrowers, slow pace of resolution is a growing concern.”
“Just two years is not a representative sample for comparison or to study IBC cases. It is too early to come to any conclusion,” said Mishra.
KS Ravichandran, Managing Partner, KSR & Co Company Secretaries LLP, said: “I have seen operational creditors are the most-affected in the last two years. The positive side of IBC is that all rules and regulations are to get ironed out as we move forward.”
Talking about threshold limit for accepting the cases under IBC, Ravichandran said: “It may be too early to review the threshold of ₹1 lakh default, though it may need a re-think in future after due consideration.” New legislation was discussed to have a low threshold for case acceptance. This has affected suppliers in SMEs the worst.”
“For acceptance of any case, the size of business and threshold limit should be related, otherwise there could be some sort of imbalance,” argued Muhamad Yavar Dhala, Managing Director, Forward Group of Companies.
Earlier, while delivering the welcome address, Kishore Alva, President-BCIC, and Joint President and Executive Director, Adani - Udupi Power Corporation Ltd, said: “Despite the various teething issues that the IBC has encountered in its relatively short journey, the spirit and the object of the law has been adequately demonstrated by the various cases that have been decided.”
Over 50 professionals, actively involved in the IBC resolution mechanism, and the Institute of Company Secretaries of India participated in the day-long session