NCLT needs clear set of protocols to flatten bankruptcy curve, say experts

Debt restructuring schemes under company law, and introduction of Code-based pre-packs are worth exploring, say experts

The temporary suspension of insolvency applications on lockdown-induced defaults has put the spotlight on the corporate debt restructuring schemes in the company law, and the introduction of Insolvency and Bankruptcy Code (IBC)-oriented pre-packs. Experts, however, are divided on the efficacy of these schemes in their current form. For the alternative debt resolution mechanism to be effective, the Companies Act, 2013, and the Code need to be amended, they argue.

Section 230 of the Companies Act provides for ‘schemes of corporate restructuring’. According to L Viswanathan, partner, Cyril Amarchand Mangaldas, there are several advantages of using these provisions. He argues the