Liquidation Under IBC On The Rise
By EDITORIAL TEAM INSOL India Posted On : September 15, 2020
Insolvency and Bankruptcy Code 2016 (IBC), which came into operation since December 2016, is admittedly one of the landmark economic legislations in India.
The Code has paved way for many a resolution and recovery by financial institutions has been over 45%. However, the recent times have seen that in the insolvency proceedings against corporate debtors there is neither any asset nor any running business and as such, no resolution applicant is coming forward to propose a resolution, resulting in an unusually high incidence of liquidation process under the IBC. Take the real estate sector by way of example. A resolution applicant would get attracted only if there are inventories or ‘receivables’ from the allottees. The financial creditor, who is also a secured creditor, would like to have minimum hair cut. The matter gets more complicated for many of the allottees have mortgaged their allotted flats to other financial institutions. This makes it a complex resolution process, not attracting Resolution Applicants.
The Adjudicating Authority/NCLT has been recognized as one of the best insolvency jurisdictions in 2018 and won the world award. One hopes and expects that the pendency of cases would get reduced and disposal and resolution would see an upward trend once suspension of Sections 7, 9 and 10 of the IBC is over by efflux of time.