1,000 bankruptcy cases should be resolved every year, says MCA secretary

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₹1 lakh to ₹1 crore in 2020, larger cases are coming in and fewer cases are expected to be withdrawn at an early stage. However, even if one-third of new cases are withdrawn at the pre-admission stage, and a few more subsequently, still there will be around 1,500 new cases to be resolved in a year, Govil explained. He added that one could argue that in future, the number of new bankruptcy cases requiring resolution could fall as they are also a function of economic cycles.

"I think we should have a capacity of at least 1000 cases (a year)," Govil added. IBBI chairperson Ravi Mital said about 300 cases are expected to be resolved under IBC this financial year and that the regulator will release three to four discussion papers in a week on fresh proposals to reduce delays. Mital said all companies that have been salvaged under the IBC process are doing well.

"This is a very big contribution of IBC and it has led to growth in the economy," said Mital. He said that until August this year, 135 debt resolutions had taken place, which would have gone up by the end of September. "If that is correct, we will end this year with 300 (bankruptcy) resolutions," Mital said.

Manoj Govil explained that one way to increase capacity is to fill up the vacant positions in National Company Law Tribunal (NCLT) and National Company Law Appellate Tribunal (NCLAT), which is being done. The government offered 15 member positions in November 2022 and another 21 earlier this year. Improving the outcomes of debt resolution under IBC is a priority for the government as it helps to clean up the balance sheets of companies and banks and facilitates a fresh investment cycle.