The Hindu Business Line : `Insolvency practices must be reviewed'

TO meet the demands of the changing economic scenario, the concept of insolvency has to be looked afresh necessitating large-scale changes in the legal framework, the Secretary, Department of Company Affairs (DCA), Mr M.M.K. Sardana, said on Monday.

"There is a need to create practical uniformity of various legislations of insolvency practices," Mr Sardana said while concurring with the view expressed by others that "insolvency regulators could not be looked in isolation''. He was inaugurating the Conference of International Association of Insolvency Regulators.

Setting the mood for the conference, Mr Sardana stated that the meet would be able to identify issues and problems that are seen to impede the efficient and effective administration of insolvencies, particularly cross-border insolvencies.

On the proposed National Company Law Tribunal (NCLT), Mr Sardana said, "recruitment of members for NCLT is on. A committee headed by the Chief Justice of India is looking into it."

Speaking on the occasion, Mr Y.H. Malegam, Chartered Accountant, touched upon the reasons why the Sick Industrial Companies (Special Provisions) Act, 1985 failed. "Besides, speedy rehabilitation has been prevented due to the existing labour policy," he said.

Illustrating some of the problems in SICA, Mr Malegam said the composition of the Board for Industrial and Financial Reconstruction (BIFR) required that experts should head it which was not so in reality. Further, any reference was made to BIFR only when a company becomes terminally ill.

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