NCLT logs 43% rise in debt resolution cases, says IBBI
Amid several bottlenecks, the Insolvency Bankruptcy Board of India (IBBI) declared 2023-24 as a landmark year, with the National Company Law Tribunal achieving a signicant 43% increase in resolutions, jumping from 189 cases in 2022-23 to 270 last year.
The IBBI is expected to submit a report to the government over the next two to three months for including “mediation” in the Insolvency and Bankruptcy Code (IBC), which is currently under discussion and scrutiny. The regulator is also working on prepackaged insolvency for large corporate cases, which is only allowed in MSME cases as of now.
For the rst time in a year, the number of outputs had increased from the number of inputs, reducing the pendency, Sudhaker Shukla, an IBBI whole-time member, said at the CII-organised 7th Insolvency and Bankruptcy Code conclave.
Mr. Shukla said that despite bottlenecks in the last seven years, resolution of 3.5 lakh crore was achieved, and 27,000 applications worth 10 lakh crore were withdrawn, making the IBC a powerful tool for debt resolution.
He said the law had evolved over time and the interventions to improve it had been remarkable.
“In 2023-24, around 12 amendments and 86 interventions have been made in the IBBI within a single year. This portrays that we are responding to market requirements to bridge the gaps,” he said.
He added that a sectoral approach had been adopted to address unique problems for a speedy resolution, like in real estate.
“We are trying to follow the sandbox approach. The recent amendments were made on real estate where project-wise resolution was made, keeping the allotted houses from liquidation was a big step forward in a sectoral approach,” Mr. Shukla said.
‘Prepacks key’
He said prepacks for large accounts were also under consideration as they aim for speedy resolution. Prepackaged insolvency involves agreeing on a resolution plan between the debtor and its creditors before going into formal bankruptcy.
P. Santhosh, MD of NARCL, the governmentbacked bad bank, asserted that a delay in resolution would erode the quality of the asset, making revival dicult.
“There are multiple factors contributing to this delay, and to avoid it, coordination with nancial creditors is crucial. The concept of prepack insolvency is yet to be adopted. However, many practitioners have discussed that this is one of the tools that can be extended to larger corporate disputes,” he said.