The Insolvency and Bankruptcy Code (IBC)-led corporate insolvency resolution framework in the country may be changing the credit culture of the country, but it is challenged by delays, smaller realisations and ethical issues, Insolvency and Bankruptcy Board of India (IBBI) chairperson Jayanti Prasad said on Thursday.
“Our biggest concerns are the time delay and ethical issues. The size of realisation in some cases needs closer attention. They will be at the top of our agenda in the coming years,” Prasad said at the tenth annual day event of IBBI.
The IBC was brought in 2016 to enable time-bound resolution and bankruptcy proceedings for companies, partnerships and individuals. The law establishes IBBI as the regulatory authority, with the National Company Law Tribunal (NCLT) as the adjudicating authority.
Prasad highlighted that resolution plans under the IBC have realised more than ₹4.35 trillion for creditors, at around 94 per cent of the share value and 166 per cent of the liquidation value. The IBC accounts for more than half of the recoveries by individual commercial banks.
“More than 30,000 applications involving underlying debt of more than Rs 14 trillion were accepted before the cases were admitted into the Corporate Insolvency Resolution Process (CIRP). The real possibility of losing the company was enough to bring the debtor to the table. It has changed the credit culture of the country,” Prasad said.
Justice Anupinder Singh Grewal, president, NCLT, said the tribunals face difficulties in approving resolution plans, with around 14 vacancies among the members and four members retiring this year.
He noted that the tribunals approved 106 resolution plans in the second quarter (July–September) of FY27, the highest ever.
Grewal also proposed raising the threshold limit to file an insolvency application while bringing in mediation as well. “I do feel that the threshold needs to be revised upwards, maybe Rs five crore if not ten. Because a lot of these…are not really meant to resolve the insolvency; they want the recovery,” he added.
On cases concerning the real estate sector, Grewal said there have been demands from various quarters to have specialised benches for the real estate sector. “Right now, we are fourteen members short. The moment we are in full strength and if we can meet the deadlines, we would definitely consider having some special benches dealing with real estate matters,” he added.
On ethical issues concerning resolution professionals, Grewal said there have been many cases of breaches leading to integrity issues. “Once a prima facie case is made out for breach of discipline or doubting the integrity, then I think they (IBBI) should write to the other regulatory bodies also. Not just he be debarred from working as an insolvency professional, but even in whatever profession he does. That needs a relook because as a judiciary authority, our (NCLT’s) role is very limited.”
