Insolvency and Bankruptcy Code: Two sides of the coin

By Alok Dhir, Dhir & Dhir Associates
0
2871
LinkedIn
Facebook
Twitter
Whatsapp
Telegram
Copy link

The Insolvency and Bankruptcy Code, 2016 (IBC), is a watershed in the history of India’s banking credit culture. Replacing a plethora of legislation it provides for a single-window, time-bound process designed to revive a company or failing which to liquidate it. Based on equity, asset maximization and promotion of entrepreneurship, the IBC aims to balance the interests of all stakeholders. Government on its part demonstrated empathy by putting its dues at the bottom of the waterfall list.

Alok DhirManaging partnerDhir & Dhir Associates
Alok Dhir
Managing partner
Dhir & Dhir Associates

A major reason for introducing the IBC was the ballooning of non-performing assets (NPAs) in the balance sheets of the top public sector banks. Total NPAs of the banking system stand at over ₹8 trillion (US$125 billion) of which ₹6 trillion are with public sector banks. The Reserve Bank of India (RBI) earlier this year identified 12 corporate accounts that accounted for about 25% of the gross NPAs of the banking system, and reports suggest that a second list of 35-40 defaulters has been drawn up. Directives have been issued to the banks to seek remedies under any of the existing schemes or to resort to the IBC.

By offering a time-bound resolution process aimed at maximizing the value of a distressed business, the IBC has benefited not just the creditor and debtor companies but has helped revive the overall economic sentiment in the country. There is a renewed effort to have the productive resources redeployed quickly. The involvement of an experienced resolution professional and monitoring of the corporate insolvency resolution process (CIRP) by the National Company Law Tribunal (NCLT) benefit all stakeholders.

You must be a subscribersubscribersubscribersubscriber to read this content, please subscribesubscribesubscribesubscribe today.

For group subscribers, please click here to access.
Interested in group subscription? Please contact us.

你需要登录去解锁本文内容。欢迎注册账号。如果想阅读月刊所有文章,欢迎成为我们的订阅会员成为我们的订阅会员

已有集团订阅,可点击此处继续浏览。
如对集团订阅感兴趣,请联络我们

Dhir & Dhir Associates is a leading full-service law firm in India. Alok Dhir is the managing partner at Dhir & Dhir Associates.

D-55, Defence Colony
New Delhi – 110 024
India

Contact details:
Tel: +91 11 4241 0000
Fax: +91 11 4241 0091
Email: alok.dhir@dhirassociates.com
Website: www.dhirassociates.com

LinkedIn
Facebook
Twitter
Whatsapp
Telegram
Copy link