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India Insolvency and Bankruptcy Code Success

India Insolvency and Bankruptcy Code Success


India Insolvency and Bankruptcy Code Success

The Insolvency and Bankruptcy Code (IBC) is an essential and a vital economic reform taken by the government in 2016, to resolve problems related to insolvencies and bankruptcy in any business in less time, providing more appropriate and acceptable solution to small investors making ease in business and secure for them.

The bill was first introduced in Lok Sabha in December 2015, which was passed on 05 May 2016 and 11 May 2016 respectively. After the implementation of the bill there were many amendments and changes happened between 05 August 2016 and 19 August, 2016.

The Insolvency and Bankruptcy Code Run Till Date

Since May 2016, after the law came into power, creditors have recovered almost Rs. 50,000 Crore, which is almost 56{e7dc6fb6a411593559bed1d9924d8030d60fc3f24c9293f7c98c249df74a0c2f} of their total admitted claims, from 32 stressed companies. One of the most important acquisitions among those 32 stressed company was of debt-ridden Bhushan Steel by Tata Steel accounting almost 64{e7dc6fb6a411593559bed1d9924d8030d60fc3f24c9293f7c98c249df74a0c2f} of the total claim i.e. almost Rs. 35,500 crore. This success of IBC law is considered not less than a history as banks had also got to recover Rs. 36,400 crore from the sales of Bhushan steel, which will directly benefit banks in terms of development. As almost 40{e7dc6fb6a411593559bed1d9924d8030d60fc3f24c9293f7c98c249df74a0c2f} of the Indian Bank’s NPAs were undergoing under the NCLT, and the steel sector of the country has the share of about 35{e7dc6fb6a411593559bed1d9924d8030d60fc3f24c9293f7c98c249df74a0c2f} in these NPAs, in which Bhushan Steel was holding the highest with about 40{e7dc6fb6a411593559bed1d9924d8030d60fc3f24c9293f7c98c249df74a0c2f} share in it. Stat also reflects that meaningful resolutions of NPAs would significantly improve banks asset quality metrics also.

Recently, Metal and mining company Vedanta has also acquired the management control of debt-laden Electrosteel Steels under the Corporate IBC law, 2016, which has added another great response in the portfolio of Insolvency and Bankruptcy Code (IBC) law, and in the financial and business development sector. The law was simply born out of necessity, which has witnessed a fast and positive effect on the insolvency system of the country, giving a remarkable boost to the credit culture of the country. This transformative change in the credit culture of Insolvency system has guided an appropriate way to sell bad assets at reasonably high value.

Following these important cases, now the focus would be on the main cases like Amtek Auto which has a loan default of about 14,000 crores in which the UK—based Liberty house has emerged as the highest bidder. Except this, there are also many other NPAs valued over 1 lakh crore, which is expected to get resolved soon.

Although, there were many changes that were implied in the IBC Law after its implementation, to overcome flaws and issues in it. And there even exist cases where debtors are now coming on their own, and resolving their cases outside the IBC. But comprehensive reports of the IBC have shown progressive reform and development in insolvency issues of the country. And besides these factors, this law has also benefited the country in the global ranking of “Ease of Business in the countries”.

Disclaimer: The views and opinions expressed in this article are those of the author(s) and do not reflect the official position of Article had been published on as-is basis and does not assume any responsibility or liability for any information(s) on this article.

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