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28/07/2021 - Indian Economy

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July 28, 2021

The capacity of Insolvency Bankruptcy code to solve cases needs to be strengthened to protect the enterprise value chain in the country. Discuss (200 Words)

Refer - The Indian Express

Enrich the answer from other sources, if the question demands.

3 comments
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Abdul hakkim 3 years

Mam /sir 

I usually  answer the questions  by copying sentences and paragraphs from other resources or from the refer link that you provided along with the question 

My doubt  is that do I need to write in my own words or just understand the  question and answer  and write the answer by copying from other resources           

What do I need to do ?

IAS Parliament 3 years

Understand the content from the given link, write the answer according to the demand of the question in your own words.

Abdul hakkim 3 years

Please review mam/sir 

Thanks

IAS Parliament 3 years

Good attempt. Keep Writing.

IAS Parliament 3 years

KEY POINTS

·        The Insolvency and Bankruptcy Code (IBC) was passed by the Parliament, bringing about a structural change in the framework that governs the corporate insolvency resolution process in India.

·        Despite a considerable improvement over the erstwhile architecture, on various parameters, outcomes under the IBC have not been as favourable as envisaged.

·        Of the 4,376 cases that have been admitted into insolvency proceedings till March 2021, resolution plans have been approved in only 348 cases (7.9 per cent), while 1,277 (29 per cent) cases have ended in liquidation.

Reasons for delays

·        A  slowing economy, uncertain future prospects may have reduced the number of interested buyers or depressed the bids for companies.

·        It is also possible that in some cases assets may have been siphoned off, leaving very little value in the company.

·        In cases that were carrying on under earlier regimes, the value of assets would have been significantly eroded.

·        In many cases, promoters have repeatedly tried to mount legal hurdles causing considerable delay  would have led to significant value destruction.

·        Errant promoters should not be allowed to manipulate the system to their advantage. The timelines for resolution need to be strictly adhered to as speedy resolution was one of the most appealing aspects of IBC.

 

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