The Insolvency and Bankruptcy Code (IBC) has played a pivotal role in resolving corporate distress, with as many as 40,943 applications filed under the law since its inception in 2016. Of these, a significant 28,818 applications amounting to a total claim of Rs 10 lakh crore were resolved even before formal admission, Union Minister of State for Corporate Affairs Harsh Malhotra informed the Lok Sabha on Monday.
The minister emphasized that the introduction of IBC has been a game-changer for India, helping the country improve its global insolvency resolution ranking by 56 places from 108 in 2018 to 52 in 2019 before the World Bank discontinued its Doing Business Report in 2021.
Expedited Resolution and Pending Cases
Among the remaining cases, 1,119 have been successfully resolved through the corporate insolvency resolution process (CIRP). However, as of December 31, 2024, the National Company Law Tribunal (NCLT) had 12,351 pending cases under the IBC and 8,133 cases under the Companies Act.
Malhotra outlined multiple reasons for these pending cases, including the complexity of disputes, legal stays by higher courts, involvement of multiple stakeholders, and frequent adjournments. To enhance efficiency, the government is implementing several measures, such as e-courts, hybrid hearings, infrastructure upgrades, and expediting the appointment of judicial members.
Homebuyers' Interests Protected Under IBC
The minister also highlighted reforms benefiting homebuyers, particularly those affected by stalled real estate projects. Under IBC, large builders and consumers approaching NCLT now receive resolutions on a tower-to-tower basis, ensuring that possession of homes continues even during insolvency proceedings.
New Global Business Ranking Framework
With the discontinuation of the World Bank's Doing Business Report, Malhotra mentioned the introduction of the B-Ready (Business Ready) project, a new initiative by the World Bank to assess business regulations worldwide. The first report was launched on October 3, 2024, and India is expected to be featured in the third phase, with results anticipated in September 2026.
IBC's Impact on India's Investment Climate
The IBC 2016 has significantly contributed to India's Ease of Doing Business, improving creditor recovery and minimizing the backlog of insolvency cases. As the government continues to refine insolvency processes, these reforms are expected to strengthen investor confidence and economic stability in the coming years.
CAclubindia
