In a statement issued on Saturday, the Chairman of the Insolvency and Bankruptcy Board of India (IBBI), Shri, Ravi Mitalopined that the Insolvency and Bankruptcy Code (IBC) has led to a behavioural change in the creditor-debtor relationship.
The Insolvency and Bankruptcy Code, 2016 (IBC/Code) was enacted to provide for insolvency resolution of distressed entities in a timebound manner.
“To keep the unprecedented reform abreast with the upcoming challenges, the Government has amended the Code six times during the last six years. The Insolvency and Bankruptcy Board of India (IBBI), the Regulator, has also made 84 amendments to its 18 regulations made under the Code, out of which around 22 amendments have been made in the past one year alone. The Code has led to behavioural change in the debtor-creditor relationship. The fear of losing control of the firm on initiation of corporate insolvency resolution process (CIRP), is nudging debtors to settle their dues with the creditors as soon as possible. Till September, 2022, 23,417 applications for initiation of CIRPs, having underlying default of ` 7.31 lakh crore were resolved before their admission. This is attributed to the behavioural change effectuated by the Code,” Shri Ravi Mitalsaid.
Throwing concern that the Code is losing its sheen due to excessive delays and loss of value in the resolution process, the Chairman added that“the performance of the Code during the past six years has been better than the previous regimes, but there is a great scope for improvement. We need to learn from our experience in the last six years and make the Code more effective in terms of processes and more result oriented. The Government and the Regulator are working in tandem, to roll out next generation reforms in the insolvency space.”
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