Introduction:
The Insolvency and Bankruptcy Code, 2016 (Code) was enacted with the aim of expediting the resolution process and maximizing asset value. However, concerns have been raised regarding the limited number of successful resolutions and the extended duration of the resolution process. To address these challenges, the Insolvency and Bankruptcy Board of India (IBBI) has published a discussion paper that analyzes completed and ongoing resolution cases, identifies the factors impacting efficiency and effectiveness, and proposes measures to enhance resolution possibilities and value.
Increasing Resolution Possibilities:
The discussion paper focuses on measures to improve the likelihood of successful resolution outcomes. It examines the market-related activities carried out by insolvency professionals (IPs) and the committee of creditors (CoC) and identifies areas for improvement. The objective is to streamline and strengthen the resolution process, enabling more companies to be revived and avoiding liquidation whenever feasible.
Enhancing Value Realization:
Maximizing the value of assets during the resolution process is a key goal of the Code. However, the discussion paper acknowledges that the current value realization has been suboptimal. It addresses the factors contributing to this issue and proposes strategies to enhance the value derived from resolution plans. By identifying and rectifying the bottlenecks, the IBBI aims to ensure that stakeholders receive the maximum possible value from the resolution process.
Timely Resolution:
Another critical aspect examined in the discussion paper is the timeliness of the resolution process. The Code emphasizes the completion of resolutions within specified timelines, but in practice, delays have been observed. The paper investigates the causes of these delays and presents recommendations to expedite the process, reducing the time taken for resolution.
Stakeholder Engagement and Input:
The IBBI encourages stakeholders, including IPs, CoCs, and other relevant parties, to provide their valuable insights and suggestions on the issues highlighted in the discussion paper. The feedback received will be considered in formulating measures to address the challenges and improve the resolution process.
The Way Forward:
By conducting a comprehensive analysis of completed and ongoing resolution cases, the IBBI aims to identify and address the factors impeding the efficiency and effectiveness of the resolution process. The proposed measures seek to increase the number of successful resolutions, enhance value realization, and ensure the timely completion of the process. The IBBI is committed to facilitating a transparent and robust insolvency framework that supports the revival and growth of viable companies while maximizing the interests of all stakeholders.
Interested parties are encouraged to submit their comments and suggestions on the discussion paper to the IBBI within the specified timeframe. The inputs received will contribute to shaping the future policies and regulations governing the resolution process under the Insolvency and Bankruptcy Code, further strengthening the insolvency ecosystem in India.
The IBBI's proactive approach to addressing the challenges faced in the resolution process demonstrates its commitment to continuous improvement and the promotion of a vibrant and efficient insolvency regime in the country.