Till September in the current financial year, 57 cases under the Insolvency Code were resolved.
new Delhi:
The government is preparing to amend the insolvency law as it seeks to reduce the time taken to complete the resolution process of stressed assets and prevent significant erosion of the value of assets, according to a senior official.
Amendments to the Insolvency and Bankruptcy Code (IBC), which came into force in 2016 for timely resolution of stressed assets, are likely to be introduced in the budget session of Parliament early next year.
The corporate affairs ministry’s move to amend the law also comes against the backdrop of concerns in various quarters that many corporate insolvency resolution processes are taking longer due to litigations and other issues despite stipulated deadlines.
A senior government official told PTI that consultations are underway with various stakeholders, including bankers and lawyers, and the changes are expected to be finalized in the coming weeks.
The focus is on how to speed up the entire resolution process by reducing the time taken.
The official said that one of the options is how fast the company undergoing the resolution process can be handed over to the winning bidder as this will help in preserving the value of the assets concerned.
As per the IBC, the affairs of a company are looked after by an insolvency resolution professional until the winning bidder takes over.
The amendments will look at implementing such provisions to ensure that there is no significant value erosion, so that the property is handed over to the winning bidder at the earliest, the official said.
Based on data from the Insolvency and Bankruptcy Board of India (IBBI) till the end of September this year, the ministry informed the Lok Sabha on December 12 that a total of 553 cases have been resolved under the IBC and the average time taken Is. The resolution was for 473 days.
Till September in the current financial year, 57 cases have been resolved under IBC and the average time taken was 679 days.
The ministry told the lower house that the longer time taken for resolution is mainly due to the associated litigation, over time, there has been an increase in the average number of negotiation applications, which is believed to affect the realizable value of properties. Is.
As per the data, it took an average of 560 days to resolve 143 cases in 2021-22, while the average time taken to resolve 120 cases in 2020-21 was 468 days.
In 2017-18, 19 cases were resolved with an average time of 230 days, and in 2018-19, 78 cases were resolved with an average time of 326 days.
In 2020-21, 120 cases were resolved and the average time taken was 468 days.
The IBC has a time limit of 330 days for the resolution process, including the time taken for litigation.
According to IBBI data, it took an average of 460 days till the end of June to prepare a resolution plan in 517 cases, while the recovery rate of creditors against claims raised was around 31 per cent.
(This story has not been edited by NDTV staff and was auto-generated from a syndicated feed.)
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