ROLE OF NCLT IN NPA RESOLUTION IN INDIA
Description
Insolvency and bankruptcy code (IBC) 2016 is the new bankruptcy law of India which aims to consolidate the existing different law into a single law. The new framework is supposed to be a time bound process. Cases of stressed accounts once admitted are supposed to be resolved within 270 days; if not, companies go into liquidation. During the resolution process, management control is taken away from promoters and vested with a resolution professional. The objectives of the paper are to analyses regulatory aspects of IBC; evaluate the progress made so far in corporate insolvency resolution process (CIRP); examine the status of the case of big defaulters that have referred to NCLT. The study critically examines the regulatory aspect of IBS. It indicates that in 50 per cent cases resolution interest is shown by the borrower itself which depicts their endeavour to protect the company going into liquidation. The resolution process could not fetch encouraging value as lenders face a substantial haircut in times of settlement of stressed assets. The exposure of steel, power and engineering, project &construction sector is highest in the RBI’s big defaulters list referred to NCLT. A noteworthy point is that the operational creditors have been the most influential in the instigation of insolvency proceedings. However, one year after RBI’s decision to refer 12 big defaulters to NCLT-1, only two cases – Bhusan Steel and Electrosteel have been resolved. The slow resolution process is ascribed to lack of interest in bidding in certain sectors e.g. power and promoters’ intention of delaying the settlement process through litigation.