The government will set up an integrated technology platform for all stakeholders involved in the debt resolution of distressed companies including the Insolvency and Bankruptcy Board of India (IBBI), lenders and tribunals, for quick, uniform and efficient rescue of companies, finance minister Nirmala Sitharaman announced in Budget 2024.
Mint reported on 16 January that the Centre planned to build a common information technology backbone linking various stakeholders of the corporate turnaround ecosystem to improve the efficacy of debt resolution and that the proposal may be announced in Budget 2024.
“An Integrated Technology Platform will be set up for improving the outcomes under the Insolvency and Bankruptcy Code (IBC) for achieving consistency, transparency, timely processing and better oversight for all stakeholders,” Sitharaman said in her speech on Tuesday.
Appropriate changes to the IBC and reforms of tribunals and appellate tribunals will be initiated to speed up insolvency resolution, she said.
The minister said additional tribunals will be established and some of them will exclusively handle cases under the Companies Act. At present, the National Company Law Tribunal takes up cases under the Companies Act as well as the IBC.
Sitharaman also said the services of the Centre for Accelerated Corporate Exit will be extended to limited liability partnerships to reduce the time for voluntary closure of these entities.
Under the bankruptcy code, more than 1,000 cases of distressed companies have been resolved, resulting in creditors directly recovering more than ₹3.3 lakh crore, Sitharaman said. In addition, 28,000 cases involving over ₹10 lakh crore have been disposed of even prior to admission, the minister said. This indicates that the IBC has had a salutary effect on the credit culture in the country as businesses tend to settle payment defaults with lenders outside the bankruptcy tribunal.
Sitharaman also said additional debt recovery tribunals will be established.
IBC reform is a top priority of the government as rescuing distressed companies and improving their balance sheets are essential to facilitate fresh investments into the economy, which will create more jobs.
