The Insolvency and Bankruptcy Code, 2016 was enacted to resolve the stress of companies. Some, however, argue that because the corporate insolvency resolution process (CIRP) rescues only about 25 per cent of companies and leads to liquidation for the rest, the code is not delivering on its mandate. These numbers do tell a story, but not the entire story. Let me tell the story as I comprehend.
First, the CIRP enables the market to attempt to resolve stress through a resolution plan whereby the company survives. When it concludes that there is no feasible resolution plan to rescue the company, the company proceeds for liquidation. The market usually rescues a viable company and liquidates an unviable one. Take the examples of Ghotaringa M…
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