A&M's Nikhil Shah Shares Insights on India's Insolvency & Bankruptcy Code (IBC)

A&M’s Nikhil Shah recently participated in two panel discussions where he shared his perspectives on contours of India’s flagship reform – the Insolvency & Bankruptcy Code (IBC), iterating that the framework, over the last 5 years, has led to the resolution of many insolvent companies, increased recoveries for creditors, improved behavioral changes with borrowers and creditors, the reallocation of capital and helped create a secondary market for distressed debt in India. As the bankruptcy code evolves, Nikhil addresses some pertinent challenges and recommends measures to make the insolvency processes more efficient for all stakeholders.

• Given the backlog of IBC applications in addition to corporate law matters, the lower count of judicial and technical members is impacting both admission and resolution process. Increasing the capacity of National Company Law Tribunal (NCLT) judges and developing a pool of experts as non-judicial resources would help. 
• Judges in mature insolvency regimes devote their time to core judicial function only, whereas the non-judicial and administrative functions are delegated to professional management or outsourced to external agencies. A similar administrative capability can be introduced in India which would allow NCLT judges to focus their time on adjudicating matters.  
• Certain applications take a long time to be admitted, since many a times the application are challenged with frivolous litigation, or the matter takes time to be listed for hearing. Admission process can be simplified for cases involving commercial banks, for instance, automatic admission if referred by scheduled banks or an ARC if accompanied by the records of Information Utility (IU). The IBC ecosystem must make use of IU as a one stop repository for all debt / claim / disputes related matters.

Watch both panel discussions to hear more from Nikhil:

• Confederation of Indian Industry (CII): Assessing 5 Years of IBC, 2016 and Mapping the Way Forward
• ENQUBE: Insolvency & Bankruptcy Code (2016) Journey So Far and Way Forward