New Delhi: Insolvency and Bankruptcy Board of India (IBBI) Chairman MM Sahu termed the Insolvency Code as a major policy reform that is now being done on behalf of the stakeholders, for the stakeholders and for the betterment of the stakeholders. has been made. He said that this code changed the mindset of the society about company insolvency. Many people were unable to service the debt and wanted a way out of the business. They have been waiting for such a way and through this law they have found their way. Sahu said in a special conversation with PTI-language that after the implementation of this code, all the decisions given by the Supreme Court related to it, this code has become more powerful and comprehensive. He said that it can be said with great pride that the maximum number of interpretations/judgments of the Court have been gathered regarding this Code, which are helping in its implementation.
So far, 70 per cent of the cases under this code have been resolved through debt-resolution process and 30 per cent through liquidation of assets. Sahu has been the chairman of the board since its formation in October 2016. He said that this code is changing the mindset of the society about bankruptcy in business. The recovery of the insolvency company through the debt resolution process and the system of liquidation or voluntary liquidation of the company which could not run has given an opportunity to those entrepreneurs who were running honestly but had been insolvent.
“A company that is unable to withstand market pressure can restructure its business or exit the market respectfully by taking recourse to this code,” he said. Thus ‘success in failure’ is going to become a new rage for new entrepreneurs in the country. The day is not far when the corporate world in India will be greeted with ‘failure too’. Since the insolvency code came into force in December 2016, 4,376 cases of debt resolution process have been received so far. Of these, 2,653 have been settled. Of these, debt resolution plans have been approved in 348 cases. 617 has been disposed of at the appeal or review stage. 411 cases have been withdrawn and 1,277 have been ordered for liquidation. He said on the basis of experience so far that ‘the overwhelming insatiable thirst for freedom to exit (from business) has made this Code a reform of the stakeholders, for the stakeholders and for the stakeholders’. The IBBI Chairman said that the restrictions imposed in this Code to prevent undue elements from taking over the debtor company have created a healthy environment for the relationship between the borrower and the lender.
He said that this code has helped in increasing the ease of doing business in India. He said that the six amendments and a few minor laws have kept the relevance of this code and helped in its implementation and meeting the changing requirements. This law was enacted at a time when there was a state of anarchy in which the sum of the claims of all the creditors did not match the available assets. He said that with success there are some drawbacks. There is a need to add components to the mechanism to deal with insolvency linked to another country or insolvency of a group. The work towards creating a cadre of appraisal professionals has started but the institutional setup will take some time. He said the average time taken in the old system of debt resolution was about five years. At present it is taking an average of 400 days. Time is short but it exceeds the target of 180 days or maximum 270 days.
Sahu also said that the laws or Acts of the economic sector are basically ‘osteopangerous’ in the beginning. The inclusion of blood and flesh in them is done only by judicial decisions. In this context, he mentioned the role of Supreme Court judgments. He said that the court gave freedom to experiment with this code. At the same time he resolved questions of principle of law, explained many concepts, settled frivolous disputes and clarified what is valid and what is invalid. This Code has created a large force of 3,500 insolvency resolution professionals. Three insolvency resolution professional agencies have been formed. There are 80 working solution professional units. There are 4,000 appraisers registered. 16 Registered Valuer Organizations and one Information Unit are functioning.