New insolvency framework to be creditor-led: IBBI chairman Ravi Mital
Insolvency and Bankruptcy Board of India (IBBI) chairman Ravi Mital on Saturday said a creditor-led resolution framework under the bankruptcy law is in the offing. The move aims to lower the workload of the adjudicating authority by enabling the committee of creditors (CoC) to take on greater responsibility and expedite the rescue of stressed firms, he said.
«We would be happy if less work goes before the NCLT (National Company Law Tribunal),» Mital said, conceding that the adjudicating authority is now over-burdened. He also rooted for a formal group insolvency framework.
Mital was speaking at an international conclave, organised by IBBI and INSOL India.
ET reported on September 18 that a creditor-led insolvency resolution mechanism, largely involving out-of-court arrangements, is in the works to ease NCLT's burden and quicken recoveries for lenders.
A voluntary group insolvency mechanism is being finalised, ET reported in October, which could empower the CoC of various bankrupt companies of a group to decide if they need to join hands or pursue resolution processes separately. The CoC typically comprises financial creditors. A formal group insolvency framework was necessitated after the interconnected nature of group companies delayed resolution in a few cases, such as Videocon, Era Infrastructure, Lanco, Educomp, Amtek, Adel, Jaypee and Aircel.
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