Unlike the IBC’s usual corporate insolvency resolution process (CIRP), the CLRP is a proposed option under which the corporate debtor keeps management control while creditors work towards a time-bound resolution (150 days extendable by 45 days) under limited court oversight, which is helpful given today’s adjudicatory level delays.
The bill also aligns with the World Bank’s ‘B-ready’ insolvency model that encourages countries to have an out-of-court mechanism, although the CLRP is a hybrid.
A CLRP may be initiated with the approval of 51% of creditors (by debt value), with the corporate debtor given time to respond. Then, an insolvency professional…