GN Bajpayi Committee report on Insolvency and Bankruptcy Code
Recently the report of GN Bajpayi Committee on Insolvency and Bankruptcy Code (IBC), 2016 has been released.
This committee has identified the following goals for the IBC process-
- Resolution of distressed assets,
- Promoting entrepreneurship,
- Credit availability and
- Balancing the interests of the stakeholders.
Key recommendations:
- A standardized framework has been suggested to assess the success of IBC and improve its implementation.
- Reliable real-time data is essential to assess the performance of the insolvency process.
- Both quantitative and non-quantitative outcomes of the Code should be measured and monitored.
- Non-quantitative results introduced by the Code, such as behavioral changes in debtors and creditors, need to be confirmed by research and quantitative proxy indicators.
- IBC provides resolution for the stress of a company, a limited liability partnership, a proprietorship, or partnership firm or an individual.
Earlier, the Parliamentary Standing Committee had also made some recommendations to strengthen the IBC such as:
- Establishment of special “National Company Law Tribunal” (NCLT) benches to hear only IBC cases,
- Creating a professional code of conduct for the committee of creditors
- Strengthening the role of solution professionals
- Digitization of the IBC platform to speed up the resolution process and maximize the realizable value of the assets, etc.
Major issues related to IBC
- Low recovery: Banks have done an average of 80% “haircut” in over 363 major offers since 2017. Long pendency of cases, delayed resolution process etc.
“Haircut” is the difference between the actual amount due from a borrower and the amount settled by him with the bank.
Source – The Hindu
