The current timeline for resolution process — 180 days after a case is triggered which can be extended by another 90 days with the approval of the National Company Law Tribunal.
The government has no immediate plan to extend the period of insolvency resolution from a maximum of 270 days now, a senior official said on Saturday, adding that a separate law was in the making to create a competent pool of regulated registered valuers.
Speaking at an event organised by industry lobby CII in Mumbai, Corporate Affairs Secretary Injeti Srinivas said even the Insolvency and Bankruptcy Code (IBC) is stabilising, proper valuers are the critical missing link in the process now as “most of the insolvency professionals are poorly equipped it being a new area for them”.
“We are assessing whether we can have a full-fledged law to regulate them (registered valuers) as they are most critical in the success of the insolvency process,” he said.
Srinivas justified the current timeline for resolution process — 180 days after a case is triggered which can be extended by another 90 days with the approval of the National Company Law Tribunal — saying timely reference of default cases to the regulator and their time-bound disposal were critical to preserving the value of the stressed assets.
While NCLTs in most cases have relented and given the additional 90-day window so far, many stakeholders have demanded the resolution period be extended to 360 days given the complexities of the process and practical difficulties.
The secretary said acceptance of late bids by NCLTs was unlikely to be repeated now, with the introduction of Section 12 A in the Code. “The bid that was accepted preceded the recent change. In the second ordinance, Section 12A was introduced precisely to deal with this problem, stating that once the deadlines are over, you cannot accept a late bid,” he said.
Speaking at the event, Insolvency and Bankruptcy Board of India (IBBI) chairman MS Sahoo said the IBC process’s focus was on timely resolution rather than recovery. “Recovery leads to a firm’s death, while resolution is adopted to rescue the company. We should not be focused on recovery… focus remains on resolution but while working on resolution, the possibility of recovery should not be ruled out. IBC is not a recovery tool, neither is it a tool to maximise the value for the creditors ,” Sahoo said.