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200 firms under IBC in 7 months, says IBBI chief M S Sahoo

Court appeals help address teething issues; SC judge for quick rollout of cross-border insolvency

Veena Mani  |  New Delhi 

M S Sahoo, chairperson, Insolvency & Bankruptcy Board of India
M S Sahoo, chairperson, Insolvency & Bankruptcy Board of India

In the seven months since the and Bankruptcy Code (IBC) became operational, the resolution process for 200 companies has started, said and Bankruptcy Board of India (IBBI) Chairman on Saturday. This includes the 12 large accounts that were referred to the National Company Law Tribunal (NCLT) by the Reserve Bank of India (RBI). 

“A number of steel and power companies have moved the to file for insolvency, so that they can restructure themselves. Only a few cases have been filed by financial creditors. Debtors and operational creditors have been the ones filling most of the cases,” said the regulator.

Sahoo added that appeals of the cases in high courts and the were helping clarify the new law. He was addressing an event, ‘Decoding the and Bankruptcy Code’, organised by the and FICCI in the national capital on Saturday. 

Regulator speak

“The code is such that a resolution professional can use any method he or she feels is suitable for resolution. It includes merger, takeover or a restructuring plan approved by the committee of creditors"

M S Sahoo, chairman, IBBI

He said several cases had gone to the courts or the National Company Law Appellate Tribunal (NCLAT). One of the earliest cases under the was ICICI Bank versus Innoventive Industries. The company, which had a debt of Rs 900 crore, had challenged in the the constitutional validity of the and the power to liquidate assets of debtor firms.

200 firms under IBC in 7 months, says IBBI chief M S Sahoo

The court admitted the constitutional validity of the code and the case came back to the NCLT, Mumbai, where the process has begun.

According to the IBC, if a company does not restructure within 180 days from the initiation of the proceeding by lenders, its assets can be liquidated. The time given to it can be extended by 90 days.

judge A K Sikri, who also addressed the event, said while the was a wonderful document, its implementation was a challenge for the and the The code provides for a market-determined and time-bound resolution of proceedings, and became operational in December 2016.

Sikri also said the provision for cross-border was yet to be implemented.

The rules for cross-border under the have been notified but not finalised by the regulator. Once they are finalised, India will enter into agreements with countries where the United Nations model for is followed.

This would help the process of companies, which have foreign assets like the 12 referred to by the RBI to the It would also help with the process of companies such as PSL Limited, which have foreign lenders.

First Published: Sat, July 29 2017. 23:57 IST