Missing deadlines, lack of people pose challenges to insolvency resolution proceedings
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This year, shortage of staff at the National Company Law Tribunal (NCLT) and the Appellate Tribunal led to missed deadlines for resolution of most of the disputed assets under the insolvency law. Meanwhile, airline companies were also seen seeking relief from insolvency provisions, although they did not get much success. As the Insolvency and Bankruptcy Code (IBC) deadlines extended beyond their limits, companies undergoing the resolution process witnessed a decline in asset values. According to data from the Insolvency and Bankruptcy Board of India (IBBI), creditors have recovered Rs 3.16 lakh crore through resolution under the IBC till September this year since its implementation in December 2016.
Next year, the NCLT and the National Company Law Appellate Tribunal (NCLAT) are expected to complete significant corporate insolvency resolutions (CIRPs), including those of Future Retail, Go First and Reliance Capital. Latest data shows that 67 per cent of insolvency resolution processes currently underway have missed the 270-day deadline. In the June quarter, the average time taken for resolution for financial lenders reached a three-year high of 643 days. Animesh Bisht, partner, Cyril Amarchand Mangaldas, said the average time of CIRP resolution plans has increased to 662 days for operational lenders and 659 days for financial lenders as per the IBBI quarterly newsletter for June-September, 2023, as determined by the IBC. Exceeds the 270 day limit.
At present, the NCLT has 55 members against the sanctioned strength of 63 members. In August 2023, the government had appointed 17 new members. Since the implementation of IBC, 7,058 cases have been initiated till September 2023. More than 2,000 CIRP cases are ongoing. The aviation sector has had a tough time with the insolvency ecosystem this year. During this period, IBBI also amended the norms regarding leasing of aircraft in view of the crisis at the now defunct Go First.
Disclaimer: IndiaTheNews has not edited this news. This news has been published from PTI-language feed.
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