Insolvency and Bankruptcy Regime in India: a Narrative
Total Page：16
File Type：pdf, Size：1020Kb
Insolvency Narrativeand Bankruptcy Regime in India A World Bank’s Resolving Insolvency India’s ing Ranking 2017 2018 2019 2020 About the Publication The Insolvency and Bankruptcy Code, 2016 (Code) has been hailed as a paradigm shift from the erstwhile insolvency regime in India in terms of its design and architecture and professionalisation of insolvency services. The efficiency and efficacy of the Code in terms of outcomes has been inspiring. The role of the Code has been lauded by the leaders of the country, including the Hon’ble President of India and the Hon’ble Prime Minister of India at various fora. The World Bank, in its annual Ease of Doing Business rankings, has also commended India’s performance in resolving insolvency since enactment of the Code. This is, thus, truly a journey worthy of being penned down and narrated to generations to come, much like other series of economic reforms rolled out by the government to foster efficiency and transparency under the mantra 'Reform, Perform, and Transform'. This publication, the second Annual publication of the Insolvency and Bankruptcy Board of India, being released on its Fourth Annual Day, is a contribution towards presenting some thoughts and viewpoints of various stakeholders in the insolvency ecosystem in terms of its passage so far and road ahead. The theme of this year’s publication is a ‘narration’ of the path the law has taken; where it stands today and what lies ahead. Practitioners, policymakers, lawyers, subject experts, and academicians have graciously shared their thoughts in the publication around this theme. The selection of articles put together aim to keep the readers abreast with the developments in the evolving area of insolvency and bankruptcy laws in the country and inspire them to know more and research further in this area. Insolvency and Bankruptcy Regime in India A Narrative 2020 Insolvency and Bankruptcy Board of India 7th Floor, Mayur Bhawan, Connaught Circus, New Delhi – 110001 www.ibbi.gov.in Title: Insolvency and Bankruptcy Regime in India - A Narrative Copyright © Insolvency and Bankruptcy Board of India and contributors severally 2020 The IBBI and contributors have asserted their right under the Copyright, Design and Patents Act, 1988 to be identified as Authors of this work. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means; electronic, mechanical, photocopying, recording or otherwise, without prior permission of the publishers. Published by: Insolvency and Bankruptcy Board of India. 7th Floor, Mayur Bhawan, Connaught Circus, New Delhi – 110001 Email: [email protected] ISBN: 978-81-947537-0-4 Typeset, Printed and Bound by: Thinking Cap Creatives Pvt. Ltd. Delhi, India Disclaimer: This Publication is designed for the sole purpose of creating awareness on the subject and must not be used as a guide for taking or recommending any action or decision, commercial or otherwise. Every effort has been made to avoid errors or omissions in this publication. A reader must do his own research and / or seek professional advice if he intends to take any action or decision in the matters covered in this publication. The views expressed in the articles are those of the authors. It is notified that neither the publisher nor the author will be responsible for any damage or loss of action to anyone, of any kind, in any manner therefrom. The Code, Rules, and Regulations relevant to the matter are available at www.ibbi.gov.in. Any views and feedback on the publication may be mailed to [email protected] Acknowledgements n the fourth Annual Day of the Insolvency and Bankruptcy Board of India (IBBI), we look back at the journey of the Insolvency and Bankruptcy Code, 2016 (Code) and that of the IBBI with a Osense of pride. It was not easy to break from the shackles of the past insolvency and bankruptcy regime in the country and come thus far. Almost every provision in the Code and every amendment to the Code in respect of corporate insolvency has been challenged on grounds of constitutional validity. The Code, judged by the generality of its provisions and not by so-called crudities and inequities, has passed the constitutional muster. In a short span of time, the Code has delivered as the best facilitator of business, which has been recognised domestically and internationally. This annual publication of the IBBI, very appropriately, reflects on the trail of the past, assesses the present and charts out the journey for the future of the Code, in the spirit of the famous quote of Anette Thomas: 'Appreciate the lessons of the past and enjoy the newness of the future, yet remember the present is today'. This, in essence, is the theme of this year’s publication, that is ‘a narrative’. We sincerely thank all the contributors who have graciously aided in the efforts of IBBI to pen down their thoughts around the theme of the publication. They have all been part of the journey of the law in one manner or another and hence, are best placed to offer their reflections. We thank them for enriching this publication. This publication has been an effort of a small team at IBBI comprising Mr. Sudhaker Shukla, Dr. Anuradha Guru, Mr. Sushanta Kumar Das, Dr. Kokila Jayaram, Ms. Medha Shekar, Mr. Santosh Saram and Ms. Pihu Mishra. We appreciate their efforts. We are thankful to Ms. Harini Srinivasan, Founder and Director, Lekhana Communications Consulting Pvt. Ltd., for guidance and help in the editing of this publication. We thank the printers Thinking Cap Creatives Pvt. Ltd. for designing and printing this publication with quality and finesse of our expectations. Bernard Baruch said, 'Millions saw the apple fall, but Newton was the one who asked why'. We are hopeful that readers will ask questions and seek to find answers on how and why the insolvency and bankruptcy regime changed dramatically, what we did right and what could have been done differently. Dr. M. S. Sahoo Chairperson Insolvency and Bankruptcy Board of India viii ix Contents Acknowledgements .......................................................................................... vii Foreword ...........................................................................................................xiii Preface ............................................................................................................... xv 1 1 Insolvency Reforms: A Road under Construction M. S. Sahoo Part I: Progression 2 21 3 27 4 35 IBC: Evolving Role in Improving Ease of Exit: The IBC Way Indian Bankruptcy Code - A Investment Climate in India Bibek Debroy and Landmark Statute Rajiv Kumar and Aparajita Gupta Poornima Advani Desh Gaurav Sekhri 5 45 6 57 7 73 Theoretical Framework of Transforming India’s Credit Culture Deeming Provisions in the Indian Insolvency Law Madhavi Goradia Divan Insolvency Law Medha Shekar and Surbhi Kapur Anuradha Guru 8 83 Social Ramifications of Bankruptcy Law Pihu Mishra and Sushanta Kumar Das x Insolvency and Bankruptcy Regime in India: A Narrative Part II: Processes 9 97 10 105 11 113 The Story Behind Section 29A of Driving Successful Resolutions Manufacturing Better Resolutions: IBC through IBC A Practitioner’s Perspective Injeti Srinivas B. Sriram Anurag Das 12 121 13 129 14 143 IBC: Some Issues in the Processes Secured Creditors under the Treatment of Guarantors and and Improvements Insolvency Code: Searching for Guarantees under the IBC: Balvinder Singh Equilibrium Evolving Jurisprudence Vinod Kothari and Sikha Bansal Aparna Ravi 15 149 16 163 17 171 Creditor Rights under IBC The (Im)Permissibility of Merger Control for Resolution Nikhil Shah, Khushboo Vaish and Discrimination under the Plans: Do Acquisitions of Anshul Dhanuka Insolvency Code Distressed Firms Warrant Shubham Jain Competition Scrutiny? M. P. Ram Mohan and Vishakha Raj 18 183 19 191 Performance of Bhushan Steel Liquidator's Claims against Limited - Pre, During and Post Exclusion Clauses in Contracts CIRP - A Case Study Unnikrishnan A. S. K. Gupta Contents xi Part III: Providers of Service 20 199 21 207 A Study of Insolvency Institutionalising Valuation Professionals in India Profession in India Abhishek Mittapally and Akash Chandra Jauhari and Kokila Jayaram Manmayi Sharma Part IV: Pandemic 22 219 23 229 24 239 The IBC Imbroglio: Challenges in Global Crisis: Setting the Agenda Evaluating Policy Options for light of COVID-19 and Solutions for Next Generation Insolvency Economic Recovery U. K. Sinha and Saparya Sood Reforms Shubhashis Gangopadhyay Sumant Batra 25 245 26 251 27 255 Debt Default, Recovery, and Addressing Distressed Micro Time for Unlock IBC V.1 Resolution in a Pandemic: What to and Small Business Debt during Somasekhar Sundaresan expect in the New Normal COVID-19 Pandemic Bhargavi Zaveri Mahesh Uttamchandani, Antonia Menezes and Sagar S. Shankar 28 257 Small Business and the Insolvency Law Ajit Ranade xii Insolvency and Bankruptcy Regime in India: A Narrative Part V: Path Ahead 29 267 30 275 31 283 New Thinking on Resolution of Building a Personal Insolvency Designing a Personal Insolvency Small Firms Framework: Fresh Start and Regime: A Baseline Framework K. P. Krishnan, Ajay Shah and Beyond Adam Feibelman and Susan Thomas Shashank Saksena Renuka Sane 32 297 33 307 34 323 Mediation in Insolvency Matters Cross Border Insolvency – A Case India’s Tryst with Cross Border Rajiv Mani to Cross the Border Beyond the Insolvency UNCITRAL Neeti Shikha Sudhaker Shukla and Kokila Jayaram 35 335 36 345 UNCITRAL Model Law on Cross IBC - Carving ‘Exit’ for Wealth Border Insolvency in the Indian Creation Legal Landscape Surbhi Jain and Sonali Chowdhry Mamata Biswal About the Contributors .................................................................................351 xiii Foreword he year 2020 has highlighted the role of uncertainty in the global economy with the COVID-19 pandemic unfolding into a crisis straining every household, firm, industry, village and city and Tcausing unprecedented distress. So has been the challenge to the Government and its institutions, all of which continue to fight valiantly with an ‘all hands-on deck’ zeal.