Insolvency and Bankruptcy Code at present provides for the resolution or liquidation of only individual stressed companies.
The insolvency regulator has set up a working group under former Sebi chairman UK Sinha to recommend a complete regulatory framework to facilitate insolvency resolution and liquidation of debtors in a corporate group within the Insolvency and Bankruptcy Code (IBC).
At present, the IBC provides for the resolution or liquidation of only individual stressed companies. So a framework within the IBC is sought to be created for the resolution/liquidation of an entire stressed corporate group having several entities in multiple NCLT jurisdictions, sources said.
The working group, with seven members and four invitees, will submit its report in two months, the Insolvency and Bankruptcy Board of India (IBBI) said in a statement on Friday.
It comprises seven members, including the chairman, and four invitees. Apart from Sinha, other members are Anshula Kant, managing director at SBI; Shardul Shroff, chairman of Shardul Amarchand Mangaldas; Shubhashis Gangopadhyay, founder of India Development Foundation; Siby Antony, chairman of Edelweiss Asset Reconstruction; Koushik Chatterjee, chief financial officer at Tata Steel; and insolvency professional Sumit Binani.
The invitees are Sumant Batra, president of the Society of Insolvency Practitioners of India; SK Gupta, CEO of Insolvency Professional Agency of the Institute of Cost Accountants of India; Alka Kapoor, CEO of ICSI Institute of Insolvency Professionals; and Sunil Pant, CEO of Institute of Insolvency Professionals of ICAI. The IBBI will provide secretarial and logistics support to the working group.
The two-year-old IBC has been the most successful mechanism to recover debt. A recent RBI report suggested that the average recovery by banks, based on the amount filed through the IBC, was as much as 41.3% in FY18, against just 12.4% through other mechanisms such as the SARFAESI Act, Debt Recovery Tribunals and Lok Adalats.