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Mint
12 hours ago
- Business
- Mint
Parliamentary panel to recommend fresh set of changes to insolvency code
New Delhi: India's insolvency regime is set for further reform as the Parliamentary Standing Committee on Finance will likely recommend a set of measures aimed at speeding up decisions and boosting creditor recoveries under the Insolvency and Bankruptcy Code (IBC), two people familiar with the matter said. The suggestions will follow the committee's ongoing review of the Code. The review comes amid growing demands for speeding up debt resolution and improving recovery rates, and legal complexities exposed by the recent Supreme Court ruling in the Bhushan Power & Steel resolution case. Read this | House panel to scan IBC functioning after SC's Bhushan order The House panel, led by lawmaker Bhartruhari Mahtab, met last week with officials from the ministry of corporate affairs and the Insolvency and Bankruptcy Board of India (IBBI), along with executives of three state-run banks, to assess the performance of the Code since its rollout in 2016. In the meeting, officials told the panel that the IBC has become the principal recovery mechanism for banks and financial institutions, accounting for nearly half of all debt recoveries, and has also helped reduce borrowing costs for distressed companies, one of the persons quoted above said. However, the process continues to suffer from persistent delays and subpar recovery rates in many cases, often due to protracted litigation among stakeholders. So far, creditors have realised ₹3.89 trillion from approved debt resolution plans and ₹9,330 crore from liquidated companies, according to data from the IBBI. Another ₹1 trillion was realised from cases settled directly between creditors and companies. The committee is expected to meet more stakeholders, including insolvency professionals and industry representatives, before finalising its report, one of the people cited above said. Among the concerns raised in last week's meetings were the challenges faced by homebuyers in ongoing insolvency cases, the person added. Queries emailed on Monday to the ministry, the Parliamentary committee and IBBI seeking comments for the story remained unanswered at the time of publication. Experts say that resolving these bottlenecks will require strengthening the judicial infrastructure supporting IBC. 'To improve the IBC process, we need faster court decisions. This can be done by increasing the number of judges, reducing adjournments, and using better technology for case tracking. The process should stick to strict timelines to avoid long delays that reduce the value of assets," said Ritesh Kumar Adatiya, director, NPV Insolvency Professionals Pvt. Ltd. Court ruling questions IBC operations The Supreme Court last month rejected the five-year-old resolution plan for Bhushan Power & Steel Ltd (BPSL), citing jurisdictional issues and violations of IBC provisions. The ₹19,700 crore successful bid by JSW Steel Ltd was overturned, and the court ordered the liquidation of the company. It later granted JSW time to file a review petition. In a landmark ruling, the apex court held that bankruptcy tribunals do not have powers of judicial review over statutory authorities such as the Enforcement Directorate (ED). It also struck down an earlier National Company Law Appellate Tribunal (NCLAT) order that had insulated BPSL's assets from ED attachment, saying the tribunal had exceeded its jurisdiction. Read this | Mint Explainer: The Supreme Court's Bhushan Power ruling that has stunned India's insolvency ecosystem That decision, along with other recent Supreme Court rulings on the priority of statutory dues and the Competition Commission of India's (CCI) clearance requirements for certain resolution plans, has introduced new legal complexities not originally anticipated in the Code. The Ministry of Corporate Affairs is now working on a draft amendment bill to clarify some of these ambiguities and streamline the process. The bill is expected to be tabled in Parliament later this year. Despite the recent judicial setbacks, the Code has a strong foundation and remains robust in ensuring debt resolution, though some glitches persist in areas where the law remains unclear, said the second person cited earlier. NPV Insolvency Professionals' Adatiya added that outcomes under IBC can improve significantly if resolution plans are filed earlier and by credible applicants. 'Proper background checks, faster approvals, and fewer legal hurdles after plans are approved can go a long way in protecting lenders' interests," he said. Also read | A series of court orders changed bankruptcy rules. Now, the govt is amending the law 'IBC has helped change the credit culture in India," he added. 'But to improve outcomes, we need quicker resolution, stronger checks on resolution applicants, and better coordination between regulators, courts, and professionals. This will boost confidence and improve returns for creditors."
Time of India
2 days ago
- Business
- Time of India
IBBI notifies amendments to streamline corporate insolvency process
The IBBI has notified amendments to the regulations governing corporate insolvency , aiming to streamline procedures, protect creditor interests, and encourage greater investor participation in resolution processes. The Insolvency and Bankruptcy Board of India (IBBI) notified the Insolvency Resolution Process for Corporate Persons Fourth Amendment regulations, 2025 on May 26, according to a release. Among the significant change introduced is a provision for allowing resolution professionals with the Committee of Creditor's (CoC) approval, to invite expressions of interest not only for the entire corporate debtor but also for individual assets or a combination of both. By enabling concurrent invitations, the resolution process can reduce timelines, prevent value erosion in viable segments, and encourage broader investor participation, IBBI said. The regulations also revise the framework for payments under resolution plans executed in stages. In such cases, financial creditors who did not support the resolution plan will now receive payments at least on a pro rata basis and ahead of those who voted in favour. Live Events The Board said this approach balances the legitimate rights of dissenting creditors with the practical constraints of phased implementation. In another notable amendment, the CoC has been empowered to direct resolution professionals to invite the interim finance providers to attend its meetings as observers without voting rights. As per IBBI, this measure is aimed to provide interim finance providers with a better understanding of the corporate debtor's operational status, thereby enabling them to make well-informed decisions regarding funding requirements. The amended norms also mandate the resolution professionals to present all received plans, including non-compliant ones to the CoC along with relevant details, it said. This provision ensures that the CoC has access to comprehensive information for decision-making, which may lead to more informed choices and ultimately contribute to a more transparent and effective resolution process, IBBI added.
Mint
2 days ago
- Business
- Mint
IBBI notifies amendments to streamline corporate insolvency process
New Delhi, Jun 2 (PTI) The IBBI has notified amendments to the regulations governing corporate insolvency, aiming to streamline procedures, protect creditor interests, and encourage greater investor participation in resolution processes. The Insolvency and Bankruptcy Board of India (IBBI) notified the Insolvency Resolution Process for Corporate Persons Fourth Amendment regulations, 2025 on May 26, according to a release. Among the significant change introduced is a provision for allowing resolution professionals with the Committee of Creditor's (CoC) approval, to invite expressions of interest not only for the entire corporate debtor but also for individual assets or a combination of both. By enabling concurrent invitations, the resolution process can reduce timelines, prevent value erosion in viable segments, and encourage broader investor participation, IBBI said. The regulations also revise the framework for payments under resolution plans executed in stages. In such cases, financial creditors who did not support the resolution plan will now receive payments at least on a pro rata basis and ahead of those who voted in favour. The Board said this approach balances the legitimate rights of dissenting creditors with the practical constraints of phased implementation. In another notable amendment, the CoC has been empowered to direct resolution professionals to invite the interim finance providers to attend its meetings as observers without voting rights. As per IBBI, this measure is aimed to provide interim finance providers with a better understanding of the corporate debtor's operational status, thereby enabling them to make well-informed decisions regarding funding requirements. The amended norms also mandate the resolution professionals to present all received plans, including non-compliant ones to the CoC along with relevant details, it said.
The Hindu
3 days ago
- Business
- The Hindu
IBBI amends regulations to further streamline corporate insolvency resolution process
The Insolvency & Bankruptcy Board of India (IBBI) has notified the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) (Fourth Amendment) Regulations, 2025 that aim to further streamline and strengthen corporate insolvency resolution process. As per the amended regulations notified on May 26, which come into effect immediately, the resolution professional — with the nod of Committee of Creditors (CoC) — can invite expression of interest for submission of resolution plans for a company under insolvency process either as a whole, or for sale of one or more of assets of the company, or for both. By enabling concurrent invitations, the resolution process will see reduced timelines, prevent value erosion in viable segments, and encourage broader investor participation, IBBI said. Where a resolution plan will provide for payment in stages, the financial creditors who did not vote in favour of the resolution plan shall be paid at least pro rata and in priority over financial creditors who voted in favour of the plan, in each stage. This approach balances the legitimate rights of dissenting creditors with the practical constraints of phased implementations, it said. Resolution professionals are now required to present all resolution plans received, including those that are non-compliant, to the CoC along with relevant details. CoC has been empowered to direct the resolution professional to invite the providers of interim finance to attend CoC meetings as observers without voting rights, IBBI said.
Mint
5 days ago
- Business
- Mint
Insolvency board allows more flexibility in asset sale of bankrupt businesses
New Delhi: The Insolvency and Bankruptcy Board of India (IBBI) has allowed administrators of bankrupt companies to sell these entities either as a whole or their assets individually, in a move that gives a great deal of flexibility in debt resolution. While amending the regulations, IBBI said this has to be done with the approval of creditors to the company. Amendments to the 2016 corporate insolvency resolution regulations published on Wednesday said the professional representative of creditors running the bankrupt business may, with the approval of creditors, invite debt resolution plans for the corporate debtor as a whole, or bids for sale of one or more of its assets or for both. That implies creditors need not waste time by first calling for bids for a company as a whole and if no investor shows interest, then proceed for asset sale. The amendments also allowed the resolution professional to invite those who provide interim finance to the distressed company during the bankruptcy proceedings to attend the meetings of creditors as observers without voting rights. Creditors run the bankrupt enterprise through the resolution professionals and decide the fate of the company by voting. The amendments have opened a new dimension in the insolvency resolution process, said Anoop Rawat, partner (insolvency and bankruptcy) at law firm Shardul Amarchand Mangaldas & Co. 'IBBI has allowed piecemeal resolution which shall enable committee of creditors (CoC) to find asset-wise resolution where resolving the corporate debtor as a whole may look cumbersome, uncertain or time consuming,' said Rawat. IBBI has been streamlining the process of debt resolution in order to improve the chances of rescuing the company and to maximize creditors' realization of their dues. Anjali Jain, partner at Areness Law, said the regulation's amendment is in sync with the practical issues faced by interim financiers as they would now be able to oversee the utilization of interim funds and hence financiers would be incentivised to extend facilities. The amended regulation, however, explicitly says interim finance providers will not have voting rights, a dampener for such financiers. Jain said the flexible resolution approach is laudable as various exit points are statutorily incorporated. This would ensure value maximization of large entities where a diversified portfolio poses challenge to potential applicants who wish to bid for one or multiple assets, but not for the entire business, added Jain. Over the years, the outcome of debt resolution under the Insolvency and Bankruptcy Code (IBC) has improved. With the government filling vacancies, the National Company Law Tribunal (NCLT) is also working at near full strength. However, extensive litigation among shareholders, creditors and multiple potential investors often complicates the process of bankruptcy resolution. Data from NCLT showed creditors stand to recover over ₹ 67,000 crore from 284 cases of bankruptcy resolution achieved in FY25, a 42% increase compared to the amount recoverable from the turnaround of 275 companies achieved in the same period a year ago, Mint reported on 15 May.
