Nirmala Sitharaman proposes changes in IBC for faster resolution of bankrupt companies

“Necessary amendments in the Code will be carried out to enhance the efficacy of the resolution process and facilitate cross- border insolvency resolution,” Sitharaman said.

The Centre for Processing Accelerated Corporate Exit (C-PACE) will be established to facilitate and speed up the voluntary winding-up of companies bringing down the currently required two years to less than six months, she said.

“A detailed statutory mechanism for resolution of cross-border insolvency would help in tackling the complex insolvency cases of groups having presence in different jurisdictions and would maximise value for all stakeholders,” said Anoop Rawat, Partner, Shardul Amarchand Mangaldas & Co.

Aashit Shah, Partner, J Sagar Associates (JSA) noted that the IBC has significantly changed the insolvency landscape over the past few years and improved recovery rates for lenders, however, the judicial infrastructure needs to be beefed up so that the timelines for admission and resolution can be crunched.

"The ambiguities in the IBC on rights and priority of secured creditors as well as dissenting creditors need to be clarified. The resolution process is a bit prescriptive in certain situations such as limiting the number of amendments to the resolution plan. Changes or clarification in some of these areas will help make the IBC more effective. An IT based accelerated system for voluntary winding up will assist companies to exit operations and help to significantly reduce the present delays in winding up,” he said.