Corporate Affairs Secretary Manoj Govil Sunday said the number of resolutions of stressed assets under insolvency norms is likely to touch 300 this financial year, after rising 80% in the last fiscal, and efforts are on to speed up the process for faster resolutions, reported PTI
The Insolvency and Bankruptcy Code (IBC) ecosystem needs to be prepared to deal with 1,000 resolutions, the Corporate Affairs Secretary said.
The number of resolutions rose 80% to 180 in the last financial year and is likely to touch 300 this year (2023-24 fiscal) and added that till August 2023, the resolutions stood at around 135, speaking at the event in Delhi to mark the seventh annual day of the Insolvency and Bankruptcy Board of India (IBBI) chairperson Ravi Mital said.
The IBC chairperson stressed that the insolvency law is not a recovery mechanism but a resolution mechanism.
“Efforts are on to speed up the resolution process and that the government is willing to take up amendments to the IBC to make the resolution process faster”, PTI quoted corporate affairs secretary Govil as saying.
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Govil said the expectation is that the number of resolutions may go up to 300 this financial year and also wondered whether that is “sufficient” to unclog the pipeline.
Around 5,000 new cases are filed every year under the IBC, Govil said adding that the IBC ecosystem should have the capacity to deal with at least 1,000 resolutions. This can be done by filling up posts, improving processes and regulations, among others, he noted.
Under the IBC law, creditors have witnessed recoveries of nearly ₹3 lakh crore so far and the recovery amount stood at more than ₹51,000 crore in 2022-23 financial year, the report said.
NCLT president chief Justice (Retd) Ramalingam Sudhakar stressed on pre-packaged insolvency resolution process in the context of Micro, Small and Medium Enterprises (MSMEs).
“Post Covid, it has been shown very evidently that MSMEs are in great distress… the next phase of evolution in the IBC should be to fine tune… pre-packaged insolvency,” Sudhakar said.
“The system should be AI-enabled with a proper decision support system and must have technology… for an integrated case management system… AI will be considered for suitable deployment as part of future contours in the insolvency ecosystem,” he added.
Justice Ashok Bhushan, chairperson of the National Company Law Appellate Tribunal (NCLAT) said the judiciary’s role in interpreting the IBC has been transformative.
“Through judgements, it has not only resolved disputes but has also shaped the IBC’s evolution ensuring that it remains a robust and effective tool for insolvency and bankruptcy in India”, the NCLAT chairman said and adding that “technology has been a force multiplier in implementation and evolution of the IBC.”
“Rapid technological advancements can render certain industries or businesses’ models obsolete. The IBC will need to cater to the insolvencies arising out of such disruptions and ensure that resources are re-allocated effectively.”
“With Indian businesses expanding globally, cross border insolvency will become more common. The IBC needs to align with the international framework and conventions to ensure seamless coordination between jurisdictions,” PTI reported Bhushan as saying.
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