Will review held-up insolvency cases: Government
New Delhi, Dec 20, 2023
With several insolvency cases languishing in bankruptcy tribunals for years, the finance ministry has decided to review these cases that are held up either in the admission or the resolution stage.
The issue is expected to be discussed in detail later this week when financial services secretary Vivek Joshi meets public sector bank chiefs, with customer service being the other key area on the agenda.
The latest move on IBC related cases comes at a time when the government is trying to address concerns around what has repeatedly been billed as one of the biggest reform initiatives piloted by the Narendra Modi administration during its over nine years in office.
Even from the original list of companies that were jointly identified by the Reserve Bank of India and the government, there are several companies, such as Jaiprakash Associates and Jaypee Infratech, which are yet to be decided, causing much embarrassment to policymakers.
While resolution was quick in the initial years of IBC, things have drastically slowed down, with admission itself taking more than a year, when the entire resolution process was to be completed within 270 days, including an extension of 90 days. Latest data showed that 67% of the cases have gone beyond the 270 day deadline. Banks and government officials have also been counting improved repayment culture, including creditors clearing the dues the moment a case is filed, as major gains.
The review by the department of financial services will also help the government identify the key pain points for the creditors that can then be taken up with the ministry of corporate affairs and the Insolvency and Bankruptcy Board of India. Both the agencies have been working to improve the functioning of tribunals and push cases, including by reworking rules and amending the law.
Bankers have been complaining of excessive delays during the resolution process, whether it is in the admission stage or during the finalisation of the resolution plan, some of which have been pending for several months as the promoter, who is being ousted often raises objections and indulges in forum shopping. Besides, authorities are also scrutinising the roles of bankers and resolution professionals to see how the process can be made more transparent and efficient, said sources.
[The Times of India]
