A comprehensive new study has revealed that the Insolvency and Bankruptcy Code (IBC) functions less as a formal resolution mechanism for Micro, Small, and Medium Enterprises (MSMEs) and more as a high-pressure settlement tool, where most cases are resolved before they even enter the courtroom.
The report, titled “MSMEs in the IBC” and released by the Management Development Institute (MDI) Gurgaon for the Insolvency and Bankruptcy Board of India (IBBI), provides the most detailed analysis yet of how India’s flagship insolvency law is playing out for the country’s economic backbone.
The ‘funnel’ effect
The study analyzed data from over 39,000 insolvency applications and found a striking pattern: nearly…