Insolvency and bankruptcy code was brought as a game changer by the government that would be able to protect the interests of the investors, but that is failing. Speedy disposal of cases is not a reality at NCLT. Recently ICRA a research firm came out with its report which underlined the issues faced by insolvency and bankruptcy code.
Timely disposal of the corporate insolvency decision initiated under the Insolvency and Bankruptcy Code (IBC) keeps staying a task, in keeping with ICRA. Of the two, 542 cases admitted below IBC to this point, 1,497 CIRPs or fifty-nine % of the overall admitted cases are still on-going in the courts. Among the CIRPs which have been closed, the simplest 15 percent CIRPs have yielded a decision plan whereas 56 percent of the cases ended up going for liquidation, Icra stated.
The on-going resolutions are growing and increasing on a 1/4th basis because the variety of instances being stated the National Company Law Tribunal (NCLT) stays excessive, consistent with an ICRA study. “While the infrastructure demanding situations for closing CIRPs-company insolvency decision system- in a well-timed manner hold, if the NCLT infrastructure isn't always similarly strengthened, we assume the growing trend of ongoing CIRPs to preserve over the near time period” said, Abhishek Dafria, Vice President, ICRA.
During the second quarter of FY’20, 27 cases that yielded a resolution plan, with the anticipated realization of Rs. 27,1/2 crores to the financial lenders. Out of this, one unsecured lender, Bhushan Power & Steel Limited (‘BPSL’), debts for the realization of Rs 19,350 crore. “However, there is no visibility at present in terms of recovery of the amount to the financial creditors as the entity is undergoing litigation at the National Company Law Appellate Tribunal (NCLAT)” stated by ICRA.
Tags : #InsolvencyCode #IBC #NCLT