Table Of ContentIndia Studies in Business and Economics
Susan Thomas Editor
Insolvency and
Bankruptcy
Reforms in
India
India Studies in Business and Economics
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Susan Thomas
Editor
Insolvency and Bankruptcy
Reforms in India
Editor
SusanThomas
JindalGlobalBusinessSchool
O.P.JindalGlobalUniversity
Sonipat,Haryana,India
ISSN 2198-0012 ISSN 2198-0020 (electronic)
IndiaStudiesinBusinessandEconomics
ISBN 978-981-16-0853-7 ISBN 978-981-16-0854-4 (eBook)
https://doi.org/10.1007/978-981-16-0854-4
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Foreword
Ease of entry, operation and exit are most essential for creating an enabling envi-
ronmentforsustainablebusiness.Whenabusinessbecomesunviable,theremustbe
anoptionforagracefulexit.Failureofabusinesscouldbeonaccountofdifferent
reasonssuchascompetition,externalcrisis,disruptivetechnology,orevenmisman-
agement. Freedom of exit is crucial, as it enables maximization of value of assets
ofthecorporatedebtor(balancingtheinterestsofallstakeholders)andreleasesthe
resourcestobeputtobettereconomicuse.
InIndia,whilealothadbeendonewithrespecttopromotingtheeaseofdoing
businessbydoingawaywithlicenserajandinspectorrajandsimplificationofproce-
duresforsettingupbusiness,exitremainedtimetakingandcumbersome,untilthe
enactment of the Insolvency and Bankruptcy Code, 2016 (IBC). Prior to that, the
insolvencylawwashighlyfragmentedandineffective.Withtheintroductionofthe
IBC there has been palpable improvement in the repayment behavior of corporate
borrowers. Successful resolutions also led to significant reduction in NPAs. The
outcomes of IBC have been noteworthy on several fronts—the time taken for and
costofinsolvencyresolution;thepercentageofrecovery;thespeedofimplementa-
tion;anddevelopmentofanewcadreofresolutionprofessionals.Governmenttoo
hasbeenproactiveinaddressingvariousimplementationissues,includingdelaysin
resolution.Itbroughtasmanyasfiveamendmentbills,allofwhichwerepassedby
theParliamentandupheldbytheapexcourt.
I had the privilege of being closely associated with this journey, both as the
Union Secretary of Corporate Affairs (from October 2017 to May 2020) and as
the Chairperson of the Insolvency Law Committee, which acted as the standing
committee for reviewing the insolvency law and making recommendations to the
Governmentfromtimetotime.Whilealothasbeendonealotmoreisintheoffing,
especially with respect to the MSME sector, individual insolvency, strengthening
the institution of resolution professionals, capacity development of committee of
creditors,cross-borderinsolvencyandintroductionofprepacks.
The report of the Bankruptcy Law Reforms Committee formed the basis of the
newinsolvencylawinIndia.Sincethen,alotofnewdevelopmentshavetakenplace.
Iamhappytonotethatthisbookundertakesanin-depthdiagnosisandevaluationof
v
vi Foreword
theCode,andfocusesonthechallengesthatlieahead,includingplausiblesolutions,
someofwhichwerepresentedanddiscussedattheIBBI-IGIDRResearchConfer-
ence held in August, 2018, of which I was a part. I would like to compliment the
authorsaswellastheeditorforbringingoutsuchacomprehensivepublicationon
thesubjectofinsolvency.
NewDelhi,India InjetiSrinivas
December2020 Chairperson
InternationalFinancialServicesCentreAuthority
Acknowledgements
Thisbookwasbornoutofthediscussionsanddeliberationsthataroseintheyears
aftertheInsolvencyandBankruptcyCode(2016)startedoperatingasthenewlegal
frameworktoresolvecorporateinsolvenciesinIndia.TheIBC,asthelawhascome
to be called, was a structural change compared to how things were done. It led
toaneruptionofdiscussionsanddeliberationsthroughaplethoraofseminarsand
conferencesacrossthecountry,withamixtureofacademics,policymakers,andprac-
titioners,participatingwithfullengagementandcommitment.Theworkpresentedin
thebookisanattempttocapturesomeoftheimportantissuesandideasthatgripped
theintellectualdebatesoftheday.
Some of the chapters in this book were presented and debated at the IBBI-
IGIDR-FICCI insolvency and bankruptcy reforms workshop that was held in
Mumbai in April 2018, and the IBBI-IGIDR insolvency and bankruptcy reforms
conference, which was held in New Delhi in August 2018. These events were
generously supported by the Ministry of Finance and with enthusiastic participa-
tion by the Ministry of Corporate Affairs and the newly created Insolvency and
Bankruptcy Board of India, the IBBI. Anirudh Burman, Sagar Goyal, Ganapathi
Narayanamoorthy, Deepak Panda, and Rajeswari Sengupta offered comments and
suggestionsthathelpedtostrengthenourunderstandingofthenewlaw,andsohelped
toimprovethequalityofthiswork.Otherchaptersarosefromotherdiscussionsand
observationsofissuesraisedinsimilarevents,aswellasinthepublicdomain.
This work has also benefitted from rich discussions with the very long list of
academics and the practitioners who have long been a part of the discourse on
bankruptcyreformsinIndia.Dr.M.S.Sahoo,formerChairpersonofIBBI,kindly
and generously gave his time to review and comment on the chapters in the book.
ThanksalsogotoInjetiSrinivas,ex-SecretaryattheMinistryofCorporateAffairs,
Gyaneshwar Singh of Ministry of Corporate Affairs, P. P. Chaudhary, Minister of
StateforLawandJusticeandCorporateAffairs,SubashChandraGargandShashank
Saksena of Ministry of Finance, Justice M. M. Kumar of the National Companies
LawTribunal,JusticeKannanRameshofSingaporeSupremeCourt,SudarshanSen
from the Reserve Bank of India, K. R. Saji Kumar, Mamta Suri, Ritesh Kavdia,
vii
viii Acknowledgements
andNavrangSainioftheInsolvencyandBankruptcyBoardofIndia,andChinmaya
GoyalofNITIAayog.
Amongindustryexperts,wewouldliketothankNikhilShahofAlvarez&Marsal,
Harish Chander and Rashesh Shah of Edelweiss, Ravi Chachra of Eight Capital,
DhananjayKumarandRichaRoyofCyrilAmarchandMangaldas,SapanGuptaof
ShardulAmarchandMangaldas,NilangDesaiandSuharshSinhaofAZB&Partners,
Sumant Batra of Kesar Dass B. & Associates, Harish Pais of Trilegal, Anuj Jain
of BSRR&Co, Badri Narayan of Third Eye Capital, Surya Mahadev of Multiples
AlternateAssetManagementandSrikrishnaDwaramofTrueNorthManagersLLP,
AnuragDasofInternationalAssetReconstructionCompany,HarshVardhanofBain
Advisors, Shaildra Ajmera, Abizer Diwanji, and Dinal Shah of EY, P. R. Ramesh
ofDeloitte,VenkattuSrinivasanofKotakMahindraBank,RajnishKumarofState
BankofIndia,ShuvaMandalofTataSons,BhargaviZaverioftheChennaiMath-
ematical Institute and the Finance Research Group, Venkatesh Panchapagesan of
IIMBangalore,YeshaYadavofVanderbiltLawSchool,SuryaPrakashfromDaksh,
AlokPrasannafromVidhiCentreforLegalPolicy,SomasekharSundaresan,Montek
SinghAhluwalia,andA.S.Chandiok.
FICCI,EightCapital,E&Y,KotakMahindraBank,Alvarez&Marsal,andTrilegal
generouslyprovidedfinancialsupportforenablingthediscussionsthroughvarious
forumsthatenrichthechaptersofthisbook.
Lastbutnottheleast,IthanktheteamfromSpringer—NupoorSinghandSagarika
Ghosh—whogavethisworktheopportunitytobepublished,andforhavingthetire-
lesspatienceandgentlepersistenceindealingwithourbusyschedulesandfollowing
up so diligently. I am similarly very grateful for the time that Rajesh Gupta and
Sudhakar Shukla of the IBBI have generously given to proof-read the manuscript
andforthedepthoftheirreview.Thiscompilationwouldhavebeenthepoorerbut
fortheirhardwork.
Finally, any book project cannot grow well without the understanding of the
familiesandpartnersofthosewhoareimmersedinthetaskofitscreation.Ithank
myfamilyfortheirunderstanding.
April2022 SusanThomas
ResearchProfessorofBusiness
JindalGlobalUniversity
Seniorresearchfellow
XKDRForum
Contents
AnOverview ...................................................... 1
SusanThomas
AnEarlyExaminationoftheRBI–12CasesUndertheIBC ............ 9
JoshFelman,VarunMarwah,andAnjaliSharma
RealEstateInsolvenciesandtheStatusofHomeBuyers ............... 37
GausiaShaikhandAnjaliSharma
PerformanceofCompanyLawTribunalsinIndia .................... 59
AditiNayakandPrasanthV.Regy
AMaximalistApproachtoDataUnderIBC .......................... 93
AdamFeibelmanandRenukaSane
PrepacksUndertheIBC:ATussleBetweenSpeedandFairProcess .... 121
AparnaRavi
TheWayForwardforPersonalInsolvency ........................... 137
RenukaSane
ValueDestructionandWealthTransferUndertheInsolvency
andBankruptcyCode,2016 ........................................ 163
PratikDatta
ix
