In new IBC, stiff guardrails for out-of-court resolution

The framework promises a quicker, more flexible alternative to tribunal-led proceedings

- Gireesh Chandra Prasad

India's proposed out-of-court debt resolution route will be open only to a narrow set of well-regulated financial creditors, two persons familiar with the discussions in the government said. The framework, now before parliament as part of amendments to the Insolvency and Bankruptcy Code (IBC), promises a quicker, more flexible alternative to tribunal-led proceedings, and will also help cut the insolvency tribunal's backlog.

In this process, the management of the defaulting company will continue to be in charge of its affairs, but under the supervision of an administrator hired by creditors. This will make the process more flexible, informal and cost-efficient compared to the regular proceedings under the IBC that has the company management making way for the administrator.