IBC has helped balance the interests of different stakeholders: CEA K Subramanian

The Insolvency and Bankruptcy Code (IBC), 2016 has helped in balancing the interests of various stakeholders, thereby, creating an optimal as well as fair ecosystem for resolving insolvency in current times, Dr Krishnamurthy Subramanian, Chief Economic Adviser, Ministry of Finance, Government of India, said while addressing the CII National Conference on ‘5-Years of the IBC & Way Forward’ organised on 27 August 2021.

Dr Subramanian said that prior to the implementation of IBC, 2016, the legislative framework in India for dealing with the insolvency and restructuring procedures of corporate entities, partnership firms and individuals was very complex as well as fragmented across multiple legislations.

The Code has laid down a collective mechanism for resolution of insolvencies in the country by maintaining a delicate balance for all stakeholders to preserve the economic value of the process in a time-bound manner.

He emphasised on the need to recognise that if one gets to keep the rewards when things are going good, the other part of the contract needs to be honoured as well. All the stakeholders involved in the insolvency procedures need to come together and overcome sub-optimal output so that the system as a whole attains its equilibrium.

Addressing the Opening Session of the National Conference, Chief Justice (Rtd) M M Kumar, Member, NHRC and Former President, NCLT opined that IBC, 2016 has brought about a paradigm shift in the resolution of stressed assets.

While the law was debtor-oriented previously, under the Code, the possession and administration has been given to the creditors and they in turn control the assets and administration through the insolvency professionals. He said that IBC cannot be studied in isolation and should be accompanied with the knowledge of Company Law, Law of Contract, Interpretation of Contractual Clauses, besides others.

Kumar highlighted that despite being a relatively new legislation, IBC, 2016 has undergone several amendments within a short span of time in a bid to eradicate any loopholes and ambiguities that may hamper the smooth and efficient functioning of the Code. He further added that in this evolving journey of resolving insolvency, the relevant authorities and legislative think-tanks have played a crucial role by manifesting new dimensions of law within the stringent timelines which further clarified the derivatives of such critical amendments.

Milon K Nag, Co-Chairman, CII Task Force on Ease of Doing Business & Chairman and Managing Director, K K Nag Private Limited, while congratulating the government on the completion of five years of IBC, 2016, stated that it has proved to be a comprehensive legislation that has been successful in reinstating financial viability and enhancing optimum asset value. Since its implementation in May 2016, the Code has effectively addressed the issue of bad loans and Non-Performing Assets (NPAs) through its robust framework, even during the challenging times of COVID-19.

The Session also witnessed the participation of eminent panellists from the restructuring and legal fraternity as well as the industry including Nikhil Shah, Managing Director, Alvarez & Marsal, Kaustubh Kulkarni, Group Head, Mergers & Acquisition and Strategic Financing, JSW Steel Limited, Krishnava Dutt, Managing Partner, Argus Partners, and Suharsh Sinha, Partner, AZB & Partners. They were of the view that IBC has been largely successful in providing a consolidated platform for lenders to recover their dues in a time-bound manner.

The Code has significantly improved the behaviours of the debtors and creditors, strengthened creditors’ rights, improved recoveries and shortened the resolution time frames. It has also allowed for re-allocation of capital and resources as well as helped create a secondary market for stressed assets. They came out with several crucial suggestions to strengthen the legal framework further such as ensuring adequate information availability, adherence to timelines by the members of the CoC, and strengthening the NCLT by appointing judges in the current 31 vacancies.

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