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Informist, Tuesday, Jul 23, 2024

--Plan integrated tech platform for improving outcome under IBC
--IBC has resolved 3.3 trln rupees worth of cases
--To have additional tribunals for IBC cases
--28,000 cases involving 10 trln rupees disposed off under IBC
--IBC reforms to strengthen NCLT, NCLAT
--Some tribunals only for IBC cases under Companies Act
--To speed up changes in IBC, reforms of tribunals

NEW DELHI – Union Finance Minister Nirmala Sitharaman, presenting the Budget for 2024-25 (Apr-Mar) today, announced that the government will set up an integrated technology platform for improving outcomes under the Insolvency and Bankruptcy Code, 2016, to achieve consistency, transparency, timely processing and better oversight for all stakeholders.

The move comes at a time when the corporate insolvency resolution process is taking over twice as long as the period prescribed under the Code. The quarterly report of the Insolvency and Bankruptcy Board of India, released in May, said that on average, the insolvency resolution process takes 679 days when the Code says it should be completed within 330 days, including all extensions granted.

The delay is often caused by litigation by multiple stakeholders with competing interests and further erodes the value of already distressed corporate debtors, minimising the recovery value for creditors, the report had said.

Further, Sitharaman today said that appropriate changes to the insolvency law, reforms and strengthening of the National Company Law Tribunals and National Company Law Appellate Tribunals will be initiated to speed up insolvency resolution. She said that additional National Company Law Tribunals will be established and out of these, some will be notified to decide cases exclusively under the Companies Act, 2013. Under the current law, the tribunals and appellate tribunals also deal with cases of companies' law, apart from handling cases under the insolvency law.

The finance minister said that the insolvency and bankruptcy law has resolved more than 1,000 companies, resulting in direct recovery of over 3.3 trln rupees to creditors. In addition, 28,000 cases involving over 10 trln rupees have been disposed of, even prior to admission, said the minister. 

In addition, Sitharaman announced steps for reforming and strengthening debt recovery tribunals. She said that additional debt recovery tribunals will be established to speed up recovery. Further, the finance minister said that the services of the Centre for Processing Accelerated Corporate Exit, called C-PACE, will be extended for voluntary closure of limited liability partnerships to reduce the closure time.

In a General Election year, the incumbent government presents an Interim Budget in Parliament. Prime Minister Narendra Modi's Bharatiya Janata Party's government presented the Interim Budget for 2024-25 on Feb 1. It returned to power with a reduced majority in the elections. Finance Minister Nirmala Sitharaman, who retained her portfolio, presented the full Budget for 2024-25 today.  End

Reported by Surya Tripathi

Edited by Aditya Sakorkar

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