For the record, the government is keen to improve operational efficiencies of the insolvency resolution process, and acutely aware of the need to expeditiously free up sunk capital of bankrupt firms. Several legislative and administrative measures have been taken apparently with this intent, and more are in the offing.
However, if anything, the time taken for the resolution has only increased over recent quarters, with some cases taking longer than 600 days to be settled, against the stipulated 180 days. There are also multiple other issues impinging on the process, such as judicial delays and an insufficient pool of resolution professionals skilled in multiple relevant disciplines. Instances are there of the tribunals concerned undermining the sanctity of the process, by intervening at inappropriate stages, and virtually overturning the resolution plans approved by the Committee of Creditors.
Not for nothing that a three-judge bench of the Supreme Court, while pronouncing a decision to liquidate Jet Airways last week, had some harsh words regarding for the insolvency resolution proceedings in the country. The apex court even put the National Company Law Tribunal (NCLT) and its appellate body (NCLAT) to notice for ignoring its orders or acting in defiance while ordering the liquidation of the airline.
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Over 16 pages of the 169-page order dwelt on what the bench – comprising the outgoing chief justice DY Chandrachud and justices Manoj Misra and JB Pardiwala – felt were the shortcomings of the Insolvency and Bankruptcy Code of 2016 (IBC) and recommendations for reforms.
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The court did not spare any of the parties involved in insolvency proceedings including successful resolution applications for their lackadaisical approach towards resolving insolvency and bankruptcies. “Scrupulous following of the provisions of the Code along with behavioural and ethical discipline is especially required from the key participants of the IBC who are central to its design i.e., the adjudicating authorities, corporate debtor, resolution professionals, committee of creditors, potential and successful resolution applicants, approved valuers and liquidators,” the order read.
Referring to how the Jet Airways insolvency resolution was handled,
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