HARSH PAIS,

“It is important to train judges as the law has a certain philosophy behind it. A judge or a lawyer, no matter how wellversed he is in legal matters, should not decide if a business survives. The creditors should decide that”

You don’t want fly-by-night professionals as that will defeat the purpose of the Act,” says K.V. Karthik, Partner, Deloitte India.

Pawan Kumar Vijay, founder of corporate and legal advisory firm Corporate Professional, says while right now we have lawyers, chartered accountants and restructuring experts, resolution professionals will require all these skills to discharge their duties. “It is, therefore, difficult for an individual to discharge the duty of a resolution professional. We may require institutions to act as resolution professionals,” he says. Aggressive Time Limits: The entire resolution process — gathering financial information, verifying creditors’ claims, a try at reviving the company, and preparing a resolution plan agreeable to 75 per cent creditors — has to be completed within 270 days. If this is not done, liquidation will follow. Many experts say this is ambitious considering the inadequate judicial infrastructure in India.

“This is an aggressive timeline in some ways. The resolution professional would have to not only coordinate for approval of a resolution plan but also manage the affairs of the company as a going concern with the Board of Directors being suspended. Further, there is no exemption from the operation of the law for companies which are suffering due to industry-wide distress – in such cases a resolution plan may not be viable. Are you going to liquidate all such companies of the affected industry?” asks Misha of Shardul Amarchand Mangaldas & Co?

In the US, the law gives the debtor 120 days to file a revival plan. This period can be increased or reduced by the court but in no case can it be extended beyond 18 months. If the debtor fails to file a plan within this period, the task is undertaken by the committee of creditors. The average time taken for completing insolvency proceedings there is a year and a half. In India, it is 4.3 years.

Such deadlines rarely work, say some. “The SARFAESI Act ( under Section 17) empowers debtors to file an appeal against any action taken by creditors with the DRT, and the DRT is required to decide such applications within four months. There is not a single case that has been decided in four months,” says Singh of the Delhi DRT Bar Association.

Also, while the resolution process has a time limit, the liquidation process can go on forever. Ajay Tyagi, Additional Secretary ( Investment), Department of Economic Affairs and a member of the committee that drafted the Bankruptcy Code, says, “The liquidation process depends on a