Voluntary mediation, creditor-led system to be introduced soon, says IBBI chairman

The government is going to introduce a voluntary mediation process for operational creditors (OCs), as well as the creditor-led resolution process (CLRP) in the coming months, in order to address the "serious issue" of delays in the insolvency process.

- FE BUREAU

Insolvency and Bankruptcy Board of India (IBBI) chairman Ravi Mittal said on Saturday. The voluntary mediation process, as detailed in a discussion paper floated by IBBI last month, intends to allow OCs the option of choosing mediation before filing insolvency applications under Section 9 of the IBC, the provision which allows OCs to initiate CIRP against a corporate debtor (CD) over non-payment of dues.

As OCs are more interested in recovering dues rather than admission/resolution of the CDs, the voluntary mediation option is likely to give the OCs an alternate method of recovery, before getting into the corporate insolvency resolution process (CIRP), which will consequently cut down the burden of the National Company Law Tribunals (NCLTs), the IBBI had said earlier.