Objective of IBC is resolution, not liquidation, says IBBI chief MS Sahoo

The lop-sided ratio between liquidation and resolution under the Insolvency and Bankruptcy Code (IBC) is not alarming.

Speaking at a Confederation of Indian Industry (CII) event on IBC, M S Sahoo, chairperson, Insolvency and Bankruptcy Board of India (IBBI), said around 818 corporate debtors had been admitted to the resolution process, of which 130 had been completed.

Of the 130 cases, around 100 were probably liquidated. Sahoo asked if it was unusual, or a cause for concern.

But he explained that from the data available for 87 companies, 79 of them were either in the Board for Industrial and Financial Reconstruction (BIFR), or were not going concerns.

Sahoo cited this as the reason the process should be started early when the company is in the pink of health. "We should look at what is there is in the ground and not in the air,” he said.

Sahoo pointed out that the focus was to achieve resolution in the corporate insolvency resolution process. “Resolution plan is not just a bidding mechanism or price discovery mechanism...our focus is on resolution. The objective is to keep the firm alive, to maximise the value of the asset and balance the interests of all stakeholders. It is definitely not liquidation,” he said.

He also said the IBC was like a behavioural law, as many companies were now closing cases before the adjudicating authority. On the latest Ordinance promulgated on June 6, Sahoo said that as soon as the ordinance came, the thought process was how to operationalise it.