Let New Paths Speed Up Insolvency Resolution

Proposed IBC amendments that include a provision for out-of-court procedures could solve its problem of delays. Crucially, a new path could reduce the role of resolution professionals

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It is welcome that the government has brought in a bill to amend the Insolvency and Bankruptcy Code (IBC) of 2016. It is equally welcome that the bill in Parliament has been referred right away to a select committee. Legislation of this kind calls for careful deliberation, an opportunity for stakeholders to present their views to lawmakers and for the latter to arrive at a balanced view of the statutory proposals.

That we need to amend the working of the corporate insolvency resolution process (CIRP) under the IBC is beyond dispute. The number of IBC cases pending before the National Company Law Tribunal (NCLT) stood at over 12,000 in 2024. The recovery of dues was only a third of the claims made—that too, thanks to a few large resolutions that yielded high levels of it. The time taken for a case to be resolved has been far in excess of what the law stipulates (180 days plus 90 days and yet another 60 days for extensions and legal proceedings, adding up to 330 days from the start of the process).