- October 3, 2017
- Posted by: admin
- Category: Daily News
- Around 400 cases of default, including 11 of the dozen large bad loan accounts of banks identified by the Reserve Bank of India, have been admitted by various National Company Law Tribunal (NCLT) benches under the Insolvency and Bankruptcy Code (IBC), 2016, reflecting a growing confidence in the nascent regulatory framework.
- The Insolvency and Bankruptcy Board of India (IBBI), the regulator that just turned one on 1 Oct 17, has created an impressive ecosystem with 1,000 registered insolvency professionals (IPs), three insolvency professional agencies (IPAs), 40 insolvency professional entities (IPEs) and one information utility.
- Of the 400 cases admitted, 2 cases (including Visakhapatnam-based Synergies-Dooray Automotive) have so far been resolved so far and 6 others have gone for liquidation. Resolution takes time, as the IBC provides for wrapping up the process in 180 days from the date of the admission of an application by the adjudicating authority.
- Such fast evolution of a new regulatory apparatus is rare in India, certainly in an area that is considered abstruse globally. Separately, to adjudicate matters, 12 benches of the NCLT have been set up by the government across the country in the past one year. The NCLT’s mandate includes hearing cases that were dealt earlier by the Company Law Board under the Companies Act, 2013, in addition to cases under the IBC.
- An efficient ecosystem will also help improve India’s position in the ‘resolving insolvency’ parameter in the World Bank’s ease of doing business index in which its rank was as low as 136 in 2016, worse than its overall rank of 130th of 190 nations. When contacted, IBBI chairman MS Sahoo told FE that the very existence of the IBC will be a disincentive for debtors to default.
- Since many of the 400 cases admitted so far have been dragging on for years much before the IBC was implemented and are, therefore, considered almost ‘dead’ by some analysts, the initial set of resolution results under the new law may not be very encouraging. However, once fresh cases of defaults regularly come up for being admitted, the resolution performance of the IBC will look much more impressive.