The idea is to enable company executives and lenders to closely watch signals of financial distress in a company that precede a payment default and to pre-empt insolvency, the people said on the condition of anonymity. It could take some time before formal proposals are framed, as the matter requires broad-based consultations, they said.
It would add preventive action to the Insolvency and Bankruptcy Code (IBC), which is currently focused on firefighting after bankruptcy proceedings are initiated either by the creditors or the company itself. The discussions follow a suggestion by the Supreme Court while hearing a case.
Such a measure could improve…