Two years of IBC: Here are its hits & misses, and the road ahead

The honeymoon period is over for the Insolvency & Bankruptcy Code. The challenge will be to sustain the momentum gained over the last two years, as more debtors come into the system. A recent study by Vidhi Centre for Legal Policy and EY takes stock of the hits and misses of the journey so far, and the road ahead

Status check

1,298 cases admitted for the corporate insolvency resolution process (CIRP);  4 per cent have been resolved and 30 per cent pending cases have crossed the 270-day deadline

46% is the average recovery for financial creditors (FC) from the 52 cases resolved

60% of the cases admitted are filed by operational creditors (OC). This after a majority of OC filings are settled before admission

259 cases of the 1,298 under the CIRP have gone into liquidation. More than 75 per cent of the liquidation cases were erstwhile Board for Industrial and Financial Reconstruction cases

288 cases of voluntary liquidation filed; more than 50 per cent are filed for closing down operations

2,158 resolution professionals (RPs) registered; 778 RPs are working or have worked on a total 1,845 cases

Top Concerns

 

• Judicial interpretation providing clarity on matters that have been challenged 
• The role of the regulator continues to evolve to meet the needs of the market and industry
• Committee of Creditors (CoCs) must recognise the importance of obtaining the right expertise 
• Behavioural change in the way repayment of debt is viewed and treated by promoters and management. All stakeholders must engage with difficulties earlier, at the first signs of distress
• Insolvency professionals will require further training and support
• International investment needs consistency of outcome and assets to be taken to the market
• Resolution implementation: Further work will be needed to aid in the implementation phase to support successful resolution applicants
• The 180/270-day timeline has proved a challenge to achieve