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Resolution of corporate insolvency cases is expected to nearly double to 300 this financial year, but the system needs to gear up to handle three times that caseload, corporate affairs secretary Manoj Govil said on Sunday.
“While 300 is good, it is not sufficient to unclog the pipeline of pending cases. We should have the capacity for handling the resolution of 1,000 cases. This number could go up and down depending on the economic climate,” Govil said.
Speaking at the seventh anniversary of the Insolvency and Bankruptcy Board of India (IBBI), Govil said nearly 90 per cent of the positions at the National Company Law Appellate Tribunal (NCLAT) had been filled and the rest were in the process.
“We are looking closely at the law and processes. The government is also considering proposals for amendments in the Insolvency and Bankruptcy Code (IBC). The aim of all the discussions is to bring down delays,” Govil said.
The government is also holding inter-ministerial discussions to be a signatory to the United Nations Commission on International Trade Law (UNCITRAL) for resolving cross-border insolvency, Govil said.
In the financial year 2022-23 (FY23), an 80 per cent increase over the previous year saw 180 cases being resolved. Until August this year, 135 cases had been resolved, according to the IBBI data.
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The number of resolutions of stressed assets under the insolvency law is likely to touch 300 this year, IBBI chairperson Ravi Mital said. He also urged resolution professionals to speed up the cases.
Creditors have recovered around Rs 3 trillion through the IBC, and the recoveries stood at more than Rs 51,000 crore last year.
Highlighting the major challenges ahead, Ramalingam Sudhakar, president of the National Company Law Tribunal (NCLT), said that there was a need to fine-tune the prepackaged insolvency process and the personal insolvency code. This will help resolve stress in the micro, small and medium enterprises (MSME) sector.
“MSMEs need a helping hand. The real challenge is to resolve stress in the MSME sector,” he said.
He also said that the existing systems need to be upgraded to handle data and case management with the use of artificial intelligence (AI).
According to him, IT systems of the IBC have to be integrated with other platforms such as goods and services tax (GST) so that the data can move seamlessly.
Ashok Bhushan, chairman of NCLAT, said that there was a need to enhance the infrastructure of the NCLT and NCLAT. This also includes ensuring upskilling of the people involved in the process with tailored training modules for different stakeholders.
“There is also a need to periodically review IBC to make sure it is aligned with the changing business environment,” Bhushan added.
