 "Budget 2024-25 commits reforms to strengthen IBC, strengthen tribunals")
The government is planning to make changes to the Insolvency and Bankruptcy Code (IBC) and introduce reforms to enhance the effectiveness of the bankruptcy tribunals and appellate tribunals. These changes aim to expedite the resolution process for companies navigating insolvency proceedings, finance minister Nirmala Sitharaman said during her budget speech.
Additionally, the government will establish more tribunals, out of which some will be notified to exclusively adjudicate cases under the Companies Act. Sitharaman also stated that an integrated technology platform will be set up for improving the outcomes under the IBC for “achieving consistency, transparency, timely processing and better oversight for all stakeholders”.
The government will also take steps reforming and strengthening debt recovery tribunals and set up more tribunals to speed up recovery.
“The current IBC tech ecosystem is relatively disintegrated on account of different IT platforms for NCLT, IBBI, IUs etc. The integrated tech platform will be extremely beneficial to all the stakeholders, as it will result in minimising delays and increasing the efficiency of the overall IBC framework”, said Siddharth Srivastava, Partner, Khaitan & Co.
Sitharaman highlighted that under IBC has resolved more than 1,000 companies, resulting in direct recovery of Rs 3.3 trillion to creditors. Additionally, 28,000 cases have been disposed of, involving Rs 10 trillion, prior to admission into insolvency proceedings. This change in debtor behavior has been a big boon for banks and other lending institutions.