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The time taken and costs involved in resolving disputes have crippled the entrepreneurial community in India. Statistics show that the recovery is only 20 per cent in India and in global ranking, the country is in the 136th position with respect to the time taken for resolving disputes. China is in the 55th position, but the top four are Japan, Germany, the US and Korea, said Gopal Krishna Raju, Chartered Accountant and Council Member of the Institute of Chartered Accountants of India.
Delivering the special address at a meeting organised by the Indian Chamber of Commerce and Industry on ‘Insolvency and Bankruptcy Code (IBC) – 2016 – A tool for Business and Restructure of Borrowings’, he said: “The government has, by ushering the IBC, envisages simplifying the various laws and helping resolve disputes in a time-bound manner.”
IBC has identified sustainability issue and this has now become the core. The crux of the code is “taking timely decision.”
He pointed out that in the last 3–4 months, a number of companies had filed their petitions before the National Company Law Tribunal, but before the application was admitted, withdrew them. “This only shows that most of these companies preferred an out-of-court settlement. Earlier, the issues remained unresolved for years under the Civil Code.”
Three ‘R’s IBC has identified three ‘R’s – Resolve, Recover and Raise (the latter, he said with reference to issue of corporate bonds to run the business).
Navrang Saini, whole-time member, Insolvency and Bankruptcy Board of India, said around 3,500 cases had been filed for insolvency of which 350 were admitted with the NCLT.
He pointed out that once companies file for insolvency with NCLT or the Debt Recovery Tribunals (DRTs), the management of the company would be taken over by the resolution professional, who will lead from the front, try and resolve the issues to let the business continue.
The liquidation process would begin only if the resolution professional is not hopeful of reviving the company.
To further ease the process, the DRTs and NCLT are being strengthened.
There are 33 DRTs at present, but this is quite insufficient to handle the number of cases. With the implementation of IBC, there definitely will be a time-bound regulation of all cases.
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