Vol 17 (2020) - Issue 6

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Revamping Resolution in India: The Need of the Hour

Synopsis
The Indian economy is in the middle of a financial turmoil, owing to the COVID-19 pandemic. With the potentially year-long suspension of the Insolvency and Bankruptcy Code, 2016, which is the key debt restructuring framework in India, the need of the hour is to explore other alternate mechanisms to revamp resolution. The article discusses five such mechanisms in detail: (a) pre-packaged insolvency, (b) the mechanism under the Micro, Small and Medium Enterprises Development Act, 2006, (c) the Reserve Bank of India Prudential Framework for Resolution of Stressed Assets, (d) schemes under the Companies Act, 2013, and (e) the concept of 'Bad Banks'. These mechanisms will also help reduce the burden on adjudicatory authorities in the country, with a significant backlog of IBC litigation already pending before the courts. Therefore, through this article, the authors intend to highlight why alternate approaches to the IBC, which further the objectives of the Indian insolvency regime, are required in the current situation.