Resolution of Insolvency Cases: Challenges and Recommendations

The Parliamentary Standing Committee on Finance recently discussed the establishment of a dedicated National Company Law Tribunal (NCLT) and National Company Law Appellate Tribunal (NCLAT) to expedite insolvency cases under the Insolvency and Bankruptcy Code (IBC).

Current Challenges

• The IBC, a significant reform, aims for smooth and timely firm exits, but delays plague the resolution process.
• The Bhushan Power and Steel case judgment by the Supreme Court has added complexity to the process.
• The existing NCLT, tasked with adjudicating IBC matters, is overstretched without corresponding capacity improvements.

Proposed Solutions

• Dedicated Tribunals: Establishment of a dedicated NCLT and appellate tribunal to handle IBC matters exclusively.
• Capacity Enhancement: Rapid capacity increase of the current NCLT and NCLAT.
• Addressing Delay Reasons: Investigate and address root causes of delays.

Importance of Timely Resolutions

• Timely case resolutions are crucial to improving outcomes and ease of business operations.
• Amendments are needed to ensure the credibility and certainty of the insolvency process.
• The risk of resolution plans being set aside years later must be mitigated to maintain confidence in the IBC.