Insolvency Code Needs 'Amendment': IBBI Chief Invites Suggestions To Reduce Delays
IBBI Chairman Ravi Mital also said that the Insolvency and Bankruptcy Code (IBC) has evolved over the years and NCLT has been approving over 35 resolutions a month.
Insolvency and Bankruptcy Board of India (IBBI) chairman Ravi Mital on Saturday asked stakeholders for innovative suggestions to help reduce delays in company insolvency resolutions and said that there is a need for an amendment, reported PTI. Mital also said that the Insolvency and Bankruptcy Code (IBC) has evolved over the years and NCLT has been approving over 35 resolutions a month.
"We have to be more innovative to reduce delays. Of course, there is a need for an amendment. If we reduce delay then the recovery will be better. Now NCLT is approving 35 plans a month and at this rate, and if it can continue it will definitely reduce delay to a large extent," the IBBI chairman said, addressing Assocham's 8th National Summit on 'Insolvency and Bankruptcy Code and Valuation'.
"Major objectives of IBC are not only recovery but revival and rehabilitation as well. It was always thought of as a resolution mechanism and not a recovery mechanism," Mital said. Adding that the aim is to "bring the company back on track. However, IBC is evaluated based on the recovery mode.”
The insolvency regulator chief also addressed the concerns regarding the delays and low recoveries by IBC.
Mittal said, "We are trying to speed up the process and are open to suggestions from stakeholders. Direct benefit of IBC is recovery, but you know the indirect benefit is even bigger and it is called a behavioural change. It is called the change in creditor and borrower relationship. Last year the National Company Law Tribunal (NCLT) approved the maximum number of resolution plans, 180, and recovery was 36 per cent, he said, adding that the average recovery was 32 per cent over the last 6-7 years."
IBC has helped in recovering over Rs 12 lakh crore since 2017, he said.
According to Mittal, delays in insolvency proceedings usually happen during the time of approval of the restoration plan when around 30-40 IAs (interim applications) are filed.
"We are trying to find out or analyse the cause of delays at various levels and are trying to speed up the processes," he added.
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