The Ministry of Corporate Affairs (MCA) secretary Injeti Srinivas said on Monday that rather than dragging Jet Airways into the insolvency process, it would be better if the issue is resolved through talks between creditors and debtors.
“I think creditors and debtor are in discussion. So that’s the best process. If there is a good outcome of this negotiation, then that’s better than dragging it to insolvency. But if that (NCLT) is only available at that stage, then the bankers will take a call,” Srinivas told reporters when asked whether Jet Airways case is fit to be brought under the IBC.
Speaking at a conference on IBC, organised by industry body CII, he also said, “The speed at which cases have been disposed by the National Company Law Tribunal (NCLT) has been commendable. But the IBC should be invoked only as the last resort.”
On the delay in the corporate insolvency resolution process (CIRP) in many cases like that of Essar Steel, Srinivas said it would not be fair to say there is a delay. “Maybe the large cases have taken more than 270 days and in some cases more than double the time. But if you look at size of the loan and quantum of recovery, then it is still an extraordinary result because in Essar more than Rs 42,000 crore will get recovered, which is a very big sum and it involves so many creditors. So you cannot avoid that much of process. For very large cases there will be more time, maybe a year of a little more than a year. It’s not too long.”
At the same event, Insolvency and Bankruptcy Board of India chairman MS Sahoo stressed the role and responsibility of the committee of creditors (CoC) in the resolution process.
Sahoo was firmly of the view that challenge before the CoC is the ability to recognise and distinguish between a company, which is potentially viable and unviable, design a feasible resolution plan for the reorganisation of viable entities while ensuring that value of the firm does not get further eroded in the process.
The CoC should be willing to restructure its liability and delay liquidation if the company has the potential to be restored to health. However, the rescue plan should be confined only to viable companies,
Source: Financial Express, March 26, 2019