India is proposing numerous reforms to the Insolvency and Bankruptcy Code (IBC), leveraging digital technology to assist overcome seemingly insurmountable distance or time barriers - and speed up the resolution of problematic loans.
Due to the time-saving benefits of digital technology, the Indian Institute of Insolvency Professionals (IIIPI), which formed a study group, has recommended greater adoption of digital modes, such as holding virtual meetings of courts and CoC (committee of creditors) and deploying AI (Artificial Intelligence), even after the eventual restoration of normalcy. IIIPI regulates insolvency professionals who play a significant role in the execution of bankruptcy resolution plans under the auspices of the Insolvency and Bankruptcy Board of India (IBBI). It has forwarded the study group's suggestions to the minister of corporate affairs and the IBBI.
In addition to improving the infrastructure, the NCLT could consider continuing 'virtual courts' long when normalcy has been restored, according to IIIPI. “Senior officials can participate in virtual courts without having to travel from their faraway locations, which speeds up decision-making and reduces delays.” Every crisis necessitates learning, which the aforementioned report appears to be accomplished by advocating best practices. According to the IIIPI study, virtual meetings during Covid restrictions resulted in quick decision making because senior authorities were present. The note stated, "This should be continued as a 'best practise' even after normalcy returns."
Dewan Housing Finance (DHFL) is a prime example. The ailing non-banking finance company was finally sold after the government changed the law to put it under the IBC. Despite many court battles, the resolution procedure was successful. The largest association of insolvency practitioners also encouraged the government to address the threat of frivolous proceedings, which are frequently used to cause delays in resolution.
NCLT has jurisdiction to hear and decide any application or process brought by or against the corporate debtor or corporate person under section 60(5)(a) of the IBC. This could be changed to limit and specify the grounds on which an applicant can file a grievance with the NCLT. One of the report's recommendations is for the IBBI to take up the matter as a top priority. About 40-50 complaints were filed with DHFL, disputing decisions made by the central bank's appointed administrator or the CoC. For people tracking, asset tracking, and transaction tracing, Artificial Intelligence (AI)-based facilities should be deployed.