Mumbai: The government is considering introducing the procedure of “deemed admission" of companies under the Insolvency and Bankruptcy Code (IBC) for faster resolution of debt-laden companies.
In certain cases where the financial creditors have approached the National Company Law Tribunal (NCLT), their petitions could consider being admitted and the resolution professional (RP) can be appointed for faster resolution, said Injeti Srinivas, Corporate Affairs Secretary on the sidelines of an event on bankruptcy.
“If the proposal gets implemented, then after the deemed admission of companies for resolution process, there would not be any immediate load on the NCLT to hear and admit the case but the RP will work for first six months and try to finish the process," added Srinivas.
This move will reduce the burden on the NCLT to hear the cases and pass an admission order and hence the tribunals can focus on the core issues of insolvency cases.
He further said that around ₹ 1.2 trillion has been settled pre-admission and non-performing assets (NPAs) of around ₹ 40,000 crore have been converted into performing assets by way of payment by the borrowers there is also a gradual decline in new NPAs which is one of the signs of the success of the IBC. Srinivas further added that there is a possibility of a dispute when it is about an operational creditor but in most cases, there is no confusion with regards to financial creditors and hence the formula of ‘deemed admission’ can be very effective.
“We don’t have cross border insolvency framework. It is now been looked at very closely and we may soon have cross border insolvency framework," said Srinivas, further adding that the government is also planning to bring in individual insolvency framework. “Individual insolvency we will start of very soon. With respect to the guarantor to the corporate debtor to start with and then we may go for partnership and then individuals," he added.