Assessing And Unravelling The Challenges Faced In The Prevailing Corporate Insolvency Resolution Process In India

Siddharth Sivaselvam, LLM, (Corporate and Commercial Law) School of Law, CHRIST (Deemed to be University) Central Campus, Hosur Road, Bangalore

Dr Sonika Bhardwaj, Associate Professor, School of Law, CHRIST (Deemed to be University) Central Campus, Hosur Road, Bangalore

I. ABSTRACT

The Insolvency and Bankruptcy Code, 2016 (IBC) is a major statute in India that aims to optimise the procedure for resolving insolvent entities. By prioritising creditor-driven resolution mechanisms, the IBC increases transparency and accountability. The policy enforces stringent time constraints, to completethe Corporate Insolvency Resolution Process (CIRP) in a maximum of 180 days. This expedites resolutions and optimises advantages for all parties involved. The repercussions of the IBC on debtor conduct are apparent, as proactive actions are implemented at different phases to mitigate financial distress. The establishment of a Committee of Creditors (CoC) and the designation of an Interim Resolution Professional (IRP) are essential elements of the CIRP. In addition to supervising the CIRP, the resolution professional is instrumental in receiving claims and determining the debtor's financial standing. Nevertheless, obstacles endure, such as the protracted approval processes of resolution plans by the National Company Law Tribunal (NCLT), which take an average of 535 days. Obstacles include the inter-se position of secured creditors, government obligations, inadequate infrastructure, and ambiguous secured creditors' rights. Amendments to improve the entitlements of secured creditors are among the measures taken to resolve these issues; however, they leave the liquidation phase uncertain. This article will aim to evaluate the current regulatory framework governing CIRP in India, and the current challenges faced and will provide suggestions for improving the efficacy of the insolvency process.

Keywords: IBC, CIRP, Resolution Professional, Resolution Plan, Creditors, Committee of Creditors, Moratorium, Liquidation, NCLT.