The Insolvency and Bankruptcy Code (IBC) has saved 160 companies from premature death, and its implementation will also help in pushing economic growth higher by a few percentage points, according to a senior official.
M S Sahoo, Chairperson of the Insolvency and Bankruptcy Board of India (IBBI), said the companies resolved under the code fetched “210 per cent of their liquidation value and if the companies were liquidated, they would have got at the best 100 per cent and the additional 110 per cent is a bonus”.
The code, which provides for resolution of stressed assets in market-linked and time-bound manner, came into force in 2016. “Of the 160 companies that have been resolved, one-third of them were defunct or under BIFR (Board for Industrial and Financial Reconstruction), and balance two-third were in distress which, if not attended, would have gone to closure. This code enabled to save these 160 companies from premature death,” Sahoo told PTI on Monday.
According to him, the implementation of the code with all its features would push up the growth rate by a few percentage points. As many as 21,136 applications have been filed under the code. About 9,653 cases involving a total amount of approximately Rs 3,74,931.30 crore have been disposed of at pre-admission stage of IBC, the government said on Sunday.
About 2,838 cases were admitted into the corporate insolvency resolution process (CIRP) and out of them, 306 cases have been closed “by appeal/review/withdrawn”, it had said. Following the implementation, several markets, including those for insolvency professionals and registered valuers, have developed.
“Even the scope of professionals like advocates, chartered accountants have increased. There is a huge market for capacity building…,” he said on the sidelines of a conference on ‘Insolvency and Bankruptcy Code, 2016: Impact on Markets and the Economy’.
The conference has been organised by the IBBI and Vidhi Centre for Legal Policy in partnership with the Faculty of Law and the Commercial Law Centre, Harris Manchester College at the University of Oxford.
Source: Financial Express, December 16, 2019