Can the new insolvency regime achieve all that it sets out to do?
A veritable logjam of cases awaits the attention of the National Company Law Tribunal, suggesting the task of recovering unpaid corporate loans is very much a work in progress. While newly emboldened creditors knock on the doors of the tribunal, cases are delayed by parties with deep pockets who have run rings around the system. This is expected and until ambiguities inherent in the new laws are ironed out, these battles will continue in courts and tribunals.
Most commentators agree that the Insolvency and Bankruptcy Code has triggered a change in mindset. Promoters and companies are wary of falling foul of creditors. This recalibration of power is to be applauded.
But what of the specifics of the new law itself? Are the timelines stipulated for resolution of cases achievable? They may not be, given that several cases have so far overshot time limits and are as yet unresolved. Add to this the challenges of transferring the reins of a troubled company to resolution professionals, especially given that there may not be enough of them. These distinctive and much-touted features of the Insolvency and Bankruptcy Code may prove to be its Achilles heel.