Voluntary mediation may not reduce delays in insolvency process

VOLUNTARY MEDIATION HAS been proposed as a dispute resolution mechanism, but experts see the regime having a limited impact in reducing delays in the insolvency process. An expert panel, constituted by the Insolvency and Bankruptcy Board of India (IBBI), has proposed the introduction of the mechanism under the Insolvency and Bankruptcy Code (IBC).

- PRIYANSH VERMA

Some experts even say that the regime may not achieve the intended goal, as it only bats for a mediation exercise by operational creditors (OCs), who don't normally initiate insolvency proceedings. "The proposal will not have any significant impact on the current delays faced in admission proceedings because a significant number of CIRP proceedings are initiated by financial creditors (FCs)," said Abdullah Qureshi, associate partner, IndiaLaw LLP.

"In the case of OC-initiated Corporate Insolvency Resolution Process (CIRP), settlement discussions run parallel (to proceedings) and parties often withdraw petition if they reach settlement. Hence, the proposed move will not have any significant impact," he said.