THE INSOLVENCY and Bankruptcy Code (IBC) was launched in 2016, with the aim to overhaul the corporate distress resolution regime. It was to protect the interests of small investors and the financial system where public monies are involved.
When a default in repayment occurs, creditors gain control over the debtor's assets and must take decisions to resolve insolvency. The IBC mooted completing the entire insolvency resolution within 180 days, with the possibility of extending the timeline, should creditors consent to it. For smaller companies, including startups with an annual turnover of Rs 1 crore, in case of insolvency, the whole exercise must be completed in 90 days, but the deadline can be extended by another 45 days. If debt resolution doesn't happen, the company goes for liquidation.
Time, Bench Strength & Valuation Concerns
Till September 2022, financial creditors had recovered only about 33 per cent of their claims in 553 corporate insolvency processes that were resolved. It took an average of 560 days to resolve 143 cases in 2021-22, while it had taken 468 days to resolve 120 cases in 2020-21. Moreover, 64 per cent of the ongoing insolvency cases have spilled beyond 270 days. While the RP (insolvency resolution professional) might want to improve on valuations with additional time for resolution, any further delay might lead to erosion in the asset valuations, as well as exodus of human capital in the enterprise. There is also a perception and worry about the lack of transparency in many IBC cases.
Esta historia es de la edición February 11, 2023 de Businessworld India.
Comience su prueba gratuita de Magzter GOLD de 7 días para acceder a miles de historias premium seleccionadas y a más de 8500 revistas y periódicos.
Ya eres suscriptor ? Conectar
Esta historia es de la edición February 11, 2023 de Businessworld India.
Comience su prueba gratuita de Magzter GOLD de 7 días para acceder a miles de historias premium seleccionadas y a más de 8500 revistas y periódicos.
Ya eres suscriptor? Conectar
Powerful, Peculiar Perquisites
MOST COMPANIES recognise that people are key to their success. Competition is all about the war for talent. Higher compensations can, in many cases, attract that brilliant leader or the tech genius, but a competitor may well offer even more. This race is financially draining and not really a great strategy.
Shaping The Future Of India's Infrastructure
RUPEN PATEL on the achievements of the engineering and construction major including the iconic projects rendered by it, nation building, focus on sustainable practices and much more
WHY DON'T WE SUE BRITAIN?
I WAS WORKING ON my next column for BW – on one of my favourite themes like ‘Sustainability’, ‘Inclusivity’, ‘India Shining’ etc.
LIFE AND TIMES OF A MEDIA TITAN
DD Purkayastha's autobiography captures his 42-year tryst with the ABP Group, delving into various aspects of his professional and personal experiences, as well as insights into the factors that have shaped his character and career trajectory
THE SONET STRIKES BACK
The sub-4-metre SUV segment in India has been a battlefield for automakers, each vying for supremacy with their unique propositions. With the launch of 2024 Kia Sonet, the South Korean automaker is sharpening its edges in this competitive market
SLEEK, SUBTLE, COMPACT AND EASY TO CARRY
The HP Omen Transcend 14 targets a niche market that is growing day by day. Statistically, never in history, was there a better time to launch a gaming laptop, says Deep Majumdar
Geopolitical Resilience for Indian Companies
It's in crisis that inventiveness is born, as well as discoveries made and great strategies arise. He who overcomes crisis, overcomes himself, without getting overcome. - Albert Einstein
The Sourav Ganguly Era
Lessons in Leadership from Indian Cricket - 2
Leadership Challenges Were Not This Long, Before
LEADING IN TODAY’S dynamic environment presents unprecedented challenges. The list of challenges is never-ending. They include navigating complex decisions, staying resilient, inspiring teams, staying innovative, and continually adapting to the constantly changing ecosystem.
The Supreme Court Emerges as a Net Zero Polestar
'Dharma exists for the welfare of all beings. Hence, that by which the welfare of all living beings is sustained, that for sure is dharma,' - Mahabharata (Shanti Parva 109.10)