Emphasising that the insolvency law provides a new lifeline to save a company from premature closure, IBBI Chairperson M S Sahoo has said the board will continue with efforts to develop best practices and ensure that regulations are “grounded on realities”.
More than three years after implementation of the Insolvency and Bankruptcy Code (IBC), which has brought in “significant behavioural changes among the stakeholders,” he said there are early evidences of the Code delivering better outcomes than the erstwhile similar frameworks.
The Insolvency and Bankruptcy Board of India (IBBI) is a key institution in the insolvency ecosystem. The Code provides for time-bound and market-linked Corporate Insolvency Resolution Process (CIRP).
The Code has undergone various amendments and the recent Supreme Court verdict in Essar Steel case has provided clarity about various aspects, including the roles of resolution professional, resolution applicant and Committee of Creditors (CoC).
When asked about the key takeaways of three years, Sahoo said the Code has re-defined the debtor-creditor relationship and brought in significant behavioural changes among the stakeholders.
“The life of a company is as precious as that of an individual. The Code provides a new lifeline to save the company from premature closure. It is the duty of the insolvency ecosystem and the stakeholders, particularly creditors, to save every company, wherever there is economic value,” he told PTI in a recent interview.
As many as 10,860 cases under the Code were pending before the National Company Law Tribunal at the end of September 2019, as per data provided by the corporate affairs ministry to the Rajya Sabha.
About the priorities of the IBBI, Sahoo said the regulator would continue its engagement with the stakeholders to ensure that insolvency reform remains a reform by, for and of the stakeholders.
“It will continue to engage with academia, industry, professionals and other stakeholders to create awareness about it, build their capacity to use the Code for insolvency resolution and liquidation, develop best practices, promote research, and to ensure that the regulations are grounded on realities,” he noted.
Further, Sahoo said the IBBI would keep a close watch on the developments and take note of lessons.
“It would modify the regulatory framework to address the challenges and to plug the loopholes, if any, within the confines of the Code, and build the capacity of the IPs (Insolvency Professionals) and other constituents to take the insolvency reforms to the next level,” he added.