COMPANY LAW TRIBUNAL HELPS CREDITORS RECOVER RS 80,000CR FROM DEFAULTING FIRMS
bunal) for insolvency include Essar Steel, the Kolkata-based dairy major Kwality Ltd, and RTIL (Reid and Tailor India Ltd), among many others. Also, according to the Insolvency and Bankruptcy Board of India, a total of 212 companies had ended in liquidation till September last year. The highest number of companies that have gone under the CIRP comes from real estate, renting and business activities, followed by wholesale and retail trade.
Lawyers and corporate experts have said that IBC-2016 has come as a boon for the corporate sector and has given confidence to moneylenders to lend money to companies with a surety that their loans would be repaid back through the help of the IBC, since the process has now been streamlined and made timebound.
Siddharth Srivastava, Partner, Link Legal, and a senior advocate on insolvency, told The Sunday Guardian: “One of the biggest advantages of the new Insolvency and Bankruptcy Code is that it is timebound and any matter coming before the NCLT for insolvency needs to be solved within 180 days with an extension of a maximum of 90 days. Therefore, within 270 days, a final decision is arrived at. Moreover, this has given a huge boost to creditors because the monetary threshold is kept at Rs 1 lakh. If a company fails to repay its creditors as low as Rs 1 lakh over and above the agreed time limit, the creditor can take the company to the NCLT for recovery.”
“The Insolvency Code has acted as a big deterrent for borrowers not to default or else the promoters and directors of the company would lose control over the company and creditors will file an insolvency case. It is also a big advantage for not only financial institutions like banks, but also for a lot of suppliers who are called operational creditors under the code. They can also file a case and get the company under insolvency if the company defaults on payments,” Srivastava added.
The IBC was brought in 2016 when the country was facing a huge debt burden through NPAS (non performing assets), to streamline the already existing framework under the Companies Act for insolvency by making it more cost effective and timebound to make corporates repay the credit they have taken from the market and other financial institutions.