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    Efficient execution and implementation of IBC can escalate Ease of Doing Business ranking: Bhupender Yadav

    Synopsis

    Bhupender Yadav while delivering the Special Plenary address in a Webinar " Five years of IBC: Reminisce and Looking ahead" organized by industry body FINER said on the various challenges faced by the Code in both legislative and regulatory front.

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    The need for a comprehensive law escalating the entire Insolvency regime was deeply felt which necessitated the enactment of unified Insolvency code.
    Chairman Joint Committee on Insolvency and Bankruptcy Code (IBC) Bhupender Yadav said that efficient execution and implementation of IBC can escalate Ease of Doing Business (EODB) ranking.

    Yadav while delivering the Special Plenary address in a Webinar, "Five years of IBC: Reminisce and Looking ahead" organized by industry body FINER, said on the various challenges faced by the Code in both legislative and regulatory front.

    He apprised all on the recent developments by the Central Government towards implementation of Prepackaged Insolvency Process for MSMEs. The need for a comprehensive law escalating the entire Insolvency regime was deeply felt which necessitated the enactment of unified Insolvency code. Hailing the IBC code as one of the landmark legislation and successful reform, he felt that the efficient execution and implementation can escalate EODB ranking.

    Justice S.J. Mukhopadhaya, Former Chairman, NCLAT and Former Judge, Supreme Court of India, expressed his views on the various issues under IBC which require to be deliberated and resolved by the regulators and the Adjudicating Authorities. Firstly, he focused on the issue w.r.t. non-admission of claims that are barred by limitation. He also presented his opinion on the provisions of the Part 2 and Part 3 of the Code with regards to application of the provisions of the code with special focus on personal guarantors. He further put up his views on the issue of the applicability of the provisions of IBC, 2016 on one-person company and the technical issues in it.

    Terming IBC as one of the finest laws, M.S. Sahoo, Chairperson of Insolvency & Bankruptcy Board of India stressed upon that the objective of the code is ‘reorganization’ and not ‘recovery’.

    He said that there were other laws to assist if recovery is the sole objective. A corporate may have a bad time or weak health for several reasons - controllable or otherwise, and it needs a helping hand to come out of its bad times which the code enables. If business is viable it comes to rescue to have its business reorganized and if it is not viable it gives it a much-required closure. The Act thus ensures maximization of value and availability of credit, and the act is not a panacea for all ills. The act needs to be used wherever there is a need to reorganize. The code gives the ultimate economic freedom to an honest businessman which is freedom of failure, and thereby promotes entrepreneurship. The act has over the period of 5 years consistently held to scrutiny and has evolved better with necessary 6 major amendments taking place, and consistent intense scrutiny through judicial judgements, making it a better law.

    Salee S. Nair, Deputy MD, Stressed Assets Resolution Group, State Bank of India, provided an overview on the behavioural changes that have brought in the last 5 years as a result of the implementation of the Code, which was a big positive for the code. Stressing the importance of timeliness of Resolution, he said the initial euphoria over the code has given way to realism.

    He gave an example to illustrate that if his ‘Stressed Assets vertical’ of SBI could resolve all pending cases one day earlier, it could save Rs. 50 CrOre in Capital account each day. A PSU could leverage this capital for fresh loan of around Rs. 1000 Crore per day considering a hypothetical situation where all realisations happened a day early. Through its various amendments, the Code has caused behavioural changes and has made promoters more ready to negotiate settlements at the initial stages of the process.

    He focused on the importance of the Pre-packaged Insolvency Process for MSMEs and the need for widening its scope for speedy resolutions. He apprised that there has been a fall in the total number of NPA accounts from 10.96% to 4.98% in the last 3 years and how there has been a paradigm shift in the ways the resolutions are reached.


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