Success of IBC should be judged on number of resolutions not on amount recovered: IBBI Chairman
The success of Insolvency and Bankruptcy Code (IBC) should be evaluated based on the number of resolutions rather than the amount of realization, Insolvency and Bankruptcy Board of India (IBBI) chairman Ravi Mittal said while addressing a Conference on “Insolvency and Bankruptcy Code – Evolving Paradigms and Reforms” organised by Confederation of Indian Industry (CII) along with National Foundation for Corporate Governance (NFCG) and Insolvency and Bankruptcy Board of India (IBBI).
He said that there are several post-resolution success stories to showcase the achievement of IBC over erstwhile legislations. “IBBI has been continuously taking calibrated measures to navigate the law through its uncharted terrain with its agile, focused and definite efforts and timely actions to make this historic Code meet its purpose specially in the matters to curtail delays plaguing the process. In this endeavor, all stakeholders have a duty to contribute to the success of the law by applying the Code in its true spirit,” the chairman said.
According to him the Insolvency and Bankruptcy Code is one of the most important economic legislations having brought about a cultural shift in the dynamics between lenders and borrowers, and promoters and creditors.
The chairman asserted the importance of innovation in implementing resolution processes. He cited certain latest cases where under the existing Regulations, insolvency cases were resolved while maximising value. He insisted on the need for making the process more transparent explaining how over-regulation would defeat the purpose of the Code. He enumerated that there is no one-size-fits-all for the resolutions.
While addressing the event, Shardul Shroff Chairman, CII Task Force on Insolvency and Bankruptcy and Executive Chairman Shardul Amarchand Mangaldas & Co, said that IBC is one of the first legislation in India that has recognized the time value of money.
“The goal of timely resolution cannot be sacrificed for the endless pursuit of value maximization”, he said. He spoke upon key themes ring fenced around IBC including imbalance between timely resolution vis-a-vis value maximization; entity preservation v/s sale as a going concern; preamble of the statute vs necessity for code of conduct for creditors; approach to cross border insolvency and stressed asset – as new investment avenue in India. He added that any amendment to the Code may be made considering the entire edifice on which the Code is built.
Vijaykumar Iyer, Partner, Deloitte India Insolvency Professionals LLP, said: “The confluence of a pro-active regulator and an active judiciary, along with the constructive participation of stakeholders has helped this ecosystem mature at an unprecedented pace, a process that continues unabated as we speak. This evolving Code has not only facilitated the resolution of several large corporate debtors, but also provided a means of exit for cases where resolution is not viable due to market forces. The impact of successful cases is not limited to recovery of capital for creditors but has also unleashed better credit behaviour amongst participants and a renewed focus on creating economic wealth amongst creditors and promoters. As the insolvency ecosystem continues to evolve, we are confident that it will continue to play a pivotal role in the vibrant and resilient economy of India.”
Siddhartha Nigam, Partner, Grant Thornton Bharat LLP, stated that “The Insolvency and Bankruptcy Code has been a remarkable reform by the government, and it is only through deliberation and collective decision-making that different views and ideas can shape and redefine this Code. Changes to the IBC are expected soon and hence, the discussions and views that would come out of this conference will act as great insights for making this law more robust and useful for various stakeholders.”
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