A Supreme Court ruling has given personal insolvency a fresh start in India
- We may now see repayment plans being placed before creditors to resolve personal insolvency even as promoters get a chance to wipe their slates clean for fresh beginnings.
The introduction of corporate insolvency under India’s Insolvency and Bankruptcy Code (IBC), 2016, was a watershed moment. It transformed the debtor-creditor relationship in India. Till August 2023, 26,518 applications for the insolvency resolution of companies with defaults on debt worth ₹9.33 trillion were withdrawn before their admission, according to data from the Insolvency and Bankruptcy Board of India (IBBI). The threat of losing ownership has changed the behaviour of debtors, many of which are opting for pre-IBC-process deals to resolve distress.