The Insolvency and Bankruptcy Code (IBC) 2016 has had a reasonably good beginning with the Insolvency and Bankruptcy Board of India (IBBI) being made operational from December 1, 2016. According to available data, more than 120 cases have already been filed with the National Company Law Tribunal, the adjudicating authority on corporate insolvency matters. The cases have been filed by operational creditors, financial creditors or the companies themselves for adjudication under the new bankruptcy code. NCLT has admitted around 85 matters, but most of the cases are in the initial stage with interim Insolvency Resolution Professionals (IRPs) appointed. The IRPs are mandated by the code and IBBI regulations to appoint valuers to determine liquidation value, collect claims and set up the committee of creditors involved in a case. The IRPs are then tasked with suggesting a resolution plan after taking into account business viability, debt size, etc. They are empowered to solicit help from industry specialists, investment bankers and other competent personnel while structuring a resolution plan. The resolution plan can be in the form of debt restructuring, one-time settlement of debt, merger/de-merger, sale of the business, etc. The committee of creditors has 180 days to approve the resolution plan from the date of admission of the company under the insolvency process. The same can be extended by 90 days in genuine cases where a resolution is about to happen. In case the committee of creditors cannot approve any of the resolution plans, then the company would go directly into liquidation. Despite the challenges, the new law, with its time-bound approach, surely provides a refreshing change and makes it easier for creditors to recover loans faster.

(Financial Express)