Unresolved code

Seven years after its enactment, the Insolvency and Bankruptcy Code is a work in progress

- NACHIKET KELKAR

The Insolvency and Bankruptcy Board of India (IBBI) admitted the petition of Bank of India to initiate insolvency proceedings against Future Retail Ltd on July 20, 2022, after the company defaulted on payments to lenders. The proposal is yet to be resolved.

Jet Airways was referred to the National Company Law Tribunal for bankruptcy proceedings in 2019, and the consortium of Dubai-based businessman Murari Lal Jalan and the UK’s Kalrock Capital won the bid for the airline in 2020. The deal has been mired in a legal tussle between the consortium and the committee of creditors on issues related to funds infusion, and the airline is still grounded.

What necessitated the Insolvency and Bankruptcy Code (IBC), brought in by the Narendra Modi government in 2016, was the inordinate delay in resolving such cases. Under the IBC, the settlement had to be completed within 180 days, with the option of 90 days extension. The timeline was later extended to 330 days. The Future Retail and the Jet Airways cases well past that timeline.

And these are not the only cases that were delayed. The Bhushan Steel case took more than 500 days to resolve. Telecom company Aircel shut shop in March 2018 and filed for bankruptcy. The resolution plan was approved by the NCLT in June 2020, some 800 days later.