Steering the “smooth and fast- paced” journey of the insolvency law, the IBBI is now looking to put in place the regime for individual insolvency in a phased manner, according to its Chairperson M S Sahoo. Around 500 corporates have been admitted for resolution and about 100 companies have commenced voluntary liquidation under the Insolvency and Bankruptcy Code (IBC), which is a little over a year old. As it enters 2018, individual insolvency regime and facilitation of corporate insolvency transactions are among the main priorities for the Insolvency and Bankruptcy Board of India (IBBI). “We are looking forward to implementing a regime for individual insolvency in a phased manner. In the first phase, we would implement the insolvency regime in respect of individuals who are guarantors to corporates undergoing resolution process,” Sahoo said. This would be followed by the regime for individuals who are doing business — proprietorship or partnership firms. While emphasising that the journey of the IBC has been “smooth, fast-paced and focused,” Sahoo said all the constituents under this Code are on the same page and that regulations are being amended to meet the emerging exigencies. “A very tentative estimate of the total underlying default amount which formed the basis for initiation of resolution of about 500 corporate debtors is about Rs 1.3 lakh crore,” the chairperson told PTI in an interview. He also made it clear that this figure is neither the total default nor total claim related to these 500 companies. The IBBI came up in October 2016 and the first corporate debtor was admitted for resolution in January this year. A case is taken up for resolution only after approval from the National Company Law Tribunal (NCLT). A significant number of lenders have initiated insolvency proceedings against various companies with regard to stressed assets while proceedings have also been started against realty firms and others.
Another priority for the IBBI is to facilitate corporate insolvency transactions. “Many resolution and liquidation transactions will mature in the next few months and those may throw up some lessons and deficiencies in the regulatory framework. We would address them expeditiously,” Sahoo noted. According to him, the NCLT, the NCLAT (National Company Law Appellate Tribunal) and the judiciary are at the forefront of the insolvency law reform. “They have settled several contentious issues expeditiously and delivered many landmark orders, bringing in clarity as what is permissible and what is not, and streamlining the process for future,” he said. When it comes to the institutional infrastructure, there are 12 benches of the NCLT, the IBBI, three Insolvency Professional Agencies (IPAs), 1,300 Insolvency Professionals (IPs), 50 Insolvency Professional Entities (IPEs) and 1 Information Utility. “We would focus on building capacity of IPs and keep a close watch on their conduct. We would facilitate operationalisation of Information Utilities so that authentic information is available to the adjudicating authority and insolvency professionals to complete the transactions expeditiously,” Sahoo said.
Asserting that the environment is conducive for the Code, the IBBI chairman said there is a helping hand from everywhere, including the RBI, SEBI and the government. “SEBI has exempted resolution plans from the requirement of public offer under the Takeover Code, preferential allotment from pricing norms, etc. “RBI has allowed information utilities and Insolvency Professionals (IPs) to access the information from credit information companies. It has recently advised all its regulated financial creditors to immediately put in place appropriate systems and procedures to ensure compliance with the provisions of the Code and regulations,” he said. Further, he noted that the government has clarified that no approval of shareholders is required for any action to be taken for implementation of an approved resolution plan.