IBBI reports 43% rise in NCLT debt resolutions in 2023-24

NCLT resolutions: The Insolvency and Bankruptcy Board of India (IBBI) has marked the fiscal year 2023-24 as a major milestone, reporting a notable 43 per cent increase in resolutions by the National Company Law Tribunal. The resolved cases surged from 189 in the previous year to 270 this year, despite encountering various challenges.

The IBBI is currently engaged in drafting a report for the government, expected to be submitted within the next 2-3 months, advocating for the inclusion of "mediation" within the framework of the Insolvency and Bankruptcy Code (IBC). This proposal is currently under review and deliberation.

Moreover, the regulatory body is actively exploring the implementation of prepackaged insolvency mechanisms for large corporate cases, a provision presently limited to Micro, Small, and Medium Enterprises (MSMEs).

Addressing the 7th Insolvency and Bankruptcy Code conclave organised by the Confederation of Indian Industry (CII), Sudhaker Shukla, a whole-time member of the IBBI, noted a noteworthy reduction in the backlog of cases nationwide, attributing it to a newfound balance between case resolutions and incoming filings.

Shukla underscored the efficacy of the IBC in resolving debts within the country, citing achievements such as the resolution of Rs 3.5 lakh crore and the withdrawal of 27,000 applications worth Rs 10 lakh crore over the past seven years.

He highlighted the continuous evolution of the law, with 12 amendments and 86 interventions introduced in the IBBI during the fiscal year 2023-24, demonstrating responsiveness to market dynamics and requirements.

Furthermore, Shukla highlighted a sectoral approach adopted to tackle specific challenges, such as in the real estate sector, where recent amendments facilitated project-wise resolutions while safeguarding allocated housing units from liquidation.

Regarding the demand for mediation and prepacks for insolvency in larger accounts, Shukla affirmed that these proposals are currently under scrutiny and will be presented to the government for consideration within the coming months.

P Santhosh, Managing Director of the National Asset Reconstruction Company Limited (NARCL), underlined the criticality of timely resolution to prevent asset deterioration, advocating for enhanced coordination with financial creditors. He underscored the potential of prepack insolvency as a tool for resolving larger corporate disputes.

B Sankar, Deputy Managing Director (stressed assets) of the State Bank of India, stressed the importance of collaboration among creditors, distressed companies, and insolvency professionals for successful resolution processes.

Insolvency professionals at the conclave gleaned insights from judicial members of the National Company Law Tribunal Kolkata, including Rohit Kapoor, Balraj Joshi, and Bidisha Banerjee, aimed at expediting resolutions.

(With PTI inputs)