The Union Government will establish additional tribunals and integrated technology system for the Insolvency and Bankruptcy Code (IBC) for better outcomes, Finance Minister Nirmala Sitharaman said in her union budget address on July 23.
"Appropriate changes to the IBC, reforms and strengthening of the tribunal and appellate tribunals will be initiated to speed up insolvency resolution. Additional tribunals will be established. Out of those, some will be notified to decide cases exclusively under the Companies Act. The government to set up integrated technology system for IBC for better outcomes,” Sitharaman said. "
The IBC has dissolved more than 1000 companies, resulting in direct recovery of Rs 3.3 lakh crore, she added. "The IBC has resolved more than 1,000 companies, resulting in direct recovery of over Rs 3.3 lakh crore to creditors. In addition, 28,000 cases involving over Rs 10 lakh crore have been disposed of, even prior to admission," Sitharaman said.
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A day before the budget, the Economic Survey showed that nine of the 12 large accounts referred by the Reserve Bank of India for resolution under the IBC have been resolved
These include the high-profile cases of Electrosteel Steels, Bhushan Steel, Monnet Ispat & Energy, Essar Steel India, Bhushan Power and Steel which found mention in the first list of companies identified by the RBI to be resolved through the IBC mode, the survey revealed.
With respect to non-banking finance companies where an amendment to IBC laws were made to cover NBFCs with asset size of Rs 500 crore or more, the resolution process is said to have yielded 42 percent of the claims. Dewan Housing Finance Corporation Ltd and Srei Equipment Finance Limited and Srei Infrastructure Finance Limited are the popular cases resolved under this framework. “
The survey also showed that the loss of control immediately after admission into the resolution process has led debtors to settle with creditors as soon as the applications are filed with the National Company Law Tribunal (NCLT). "A singularly notable fact is that Rs 10.2 lakh crore of underlying defaults were addressed at the pre-admission stage,” the survey noted. In FY24, the number of resolved cases through approved resolution plan stood at 269 cases, a jump of 42 percent year-on-year," it showed.
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