Chief economic advisor (CEA) Krishnamurthy V Subramanian on Friday exhorted stakeholders of the insolvency ecosystem to rise above “I, me and myself” and take decisions based on what is “socially optimal”. This will improve the outcome of the process to resolve toxic assets under the Insolvency and Bankruptcy Code (IBC).
Speaking at a CII event, the CEA also said, “Systems, whether it’s IBC or other systems, can be caught in inefficient equilibria when each agent justifies his or her suboptimal actions by saying that other entities are actually behaving sub-optimally and, therefore, I am behaving sub-optimally.”
Subramanian stressed that before the introduction of the IBC five years ago, there used to be “feudalism where the corporate debtor took it to be his or her divine right to be in control (of their firm)”.
Justice (retd) MM Kumar, former president of National Company Law Tribunal (NCLT), said the pre-pack scheme, a fast-track bankruptcy resolution mechanism introduced in April for MSMEs, may have to be universalised to include larger businesses as well.