Parliament is reviewing a fix for India’s bankruptcy law that promises faster resolutions, but the proposed plan has some fundamental flaws.
The Insolvency and Bankruptcy Code (IBC) 2016 is up for a reset under an amendment bill currently being considered by the Lok Sabha. A key proposal is the introduction of an alternative insolvency resolution process alongside the one the IBC currently provides. This parallel process is intended to be largely out-of-court.
Unlike the existing model, it does not require creditors to obtain the approval of the National Company Law Tribunal (NCLT) to trigger insolvency. And unlike the current system, which puts a resolution professional in charge of running the company during the insolvency resolution…