The government is set to introduce amendments to the Insolvency and Bankruptcy Code (IBC) aimed at reducing the time taken for case admissions in Company Law Tribunals to just three months, down from the current average of 400-600 days, a senior official from the Corporate Affairs Ministry revealed.
Efforts to expedite the admission process are crucial for making the IBC more conducive to resolution. Amendments will be proposed after the Lok Sabha elections to address this issue and enhance the law’s efficiency.
One of the challenges contributing to delays in the admission process is establishing the validity of loans. To streamline this, public sector banks have suggested leveraging the NeSL repository to validate loans, potentially significantly reducing admission timelines at the National Company Law Tribunal (NCLT).
Additionally, the government aims to enhance realisation against claims from the current average of 35% to at least 50%. Persistent delays in the process escalate costs, diminish enterprise value, and impede recovery, making it imperative to streamline procedures and improve efficiency.
Proposed amendments include introducing fast-track corporate insolvency procedures, allowing project-wise resolution to focus on specific distressed assets, and addressing cross-border insolvency cases, where debtors have assets in multiple countries.
These amendments aim to streamline the resolution process, reduce delays, and enhance recovery rates, ultimately bolstering the effectiveness of the IBC in resolving insolvency cases.
