180 days too long to resolve insolvency cases: Bankruptcy board chief Sahoo

Tells lawyers to take up issue of compulsory quoting fees directly with the Bar Council

While adhering to a timeline of 180 days for resolution under the Insolvency and Bankruptcy Code (IBC) is important initially, going forward, the system would need to evolve so that it does not take that much time to finalise resolutions, said M S Sahoo, chairperson, Insolvency and Bankruptcy Board of India (IBBI).

In the initial stages of implementation of the code, such a timeline it would appear too less, but as the system evolves, one would find that it is too long. There was a time when the transfer of shares could be could not be effected in 60 day's time under the Companies Act and more time was sought. Today, however, a transfer does not even take 60 milli seconds, and in  the stock market, trading responses are recorded in micro seconds.

Responding to a query on whether the 180-day timeline is adequate, he said, "Initially there may be problems, because systems are not in place. As many transactions go through, practices will be streamlined, standardised and automated. Artificial intelligence will be coming in and machines will take over a lot of work and there would also be pre-pack."He was addressing a gathering of various stakeholders including the industry and the legal fraternity.

"If I am a lender, before I trigger the process, I would think about a resolution plan and in case I cannot have it, I will not proceed. I will do pre-preparation. You start preparing for an examination and then you go for the enrolment. Would it be easier of you gave more time for the revival? It would be better to do it at the earliest," he added.

In some cases, efforts are on to fast track the process to complete the procedure within 90 days.

There are four institutional pillars of the Insolvency and Bankruptcy Code -- the adjudicating authority, the regulations guiding insolvency professionals and agencies, the insolvency professionals themselves, and information utilities. Of these, the first three are in place while the fourth is pending.

In order to put information utilities in place, data on all credit needs to be collected, authenticated and verified. Correct information needs to be available to help the National Company Law Tribunal (NCLT) admit or reject a matter, and help insolvency professional to verify claims, so that the transactions move seamlessly.

The regulations have been notified. Now it is for the market to come up, seek registration and start working, Sahoo said.

Responding to an observation by lawyers that the rules calling for insolvency professionals to quote their fees runs contra to Bar Council norms, Sahoo, said the issue has to be resolved between the lawyers and the Bar Council and that the IBBI would not be involved.

He added that the initial regulations and guidelines are based on the available information and there would be changes as per the requirement.