GROUP INSOLVENCY FRAMEWORK - AN EAGERLY AWAITED AMENDMENT TO THE INSOLVENCY AND BANKRUPTCY CODE (IBC).

Abstract: Insolvency and Bankruptcy code (IBC) was introduced in 2016 to provide for a robust and efficient insolvency ecosystem in India. At present, the insolvency regime takes up insolvency proceedings on individual entity basis i.e. each corporate debtor is treated as an individual entity and resolution is done accordingly.

- Abhijit De

However, there are a growing number of cases wherein companies which are a part of same corporate group come for insolvency resolutions. These cases are dealt with in isolation in the absence of a framework to have a common resolution for them. Issues related to interconnectedness of group companies have taken center stage in several insolvency proceedings. Thus, a demand for a "Group Insolvency Resolution Framework" has been voiced by the stakeholders of the IBC ecosystem.

Against this backdrop, this article attempts to throw some light on the various facets of the Group Insolvency Mechanism, the likely benefits of such a framework and the global legislations and cross border practices in this regard. The article also highlights the various measures taken by the government and the Insolvency and Bankruptcy Board of India (IBBI) for evolving the Group Insolvency norms.

Insolvency and Bankruptcy code (IBC) was introduced in 2016 to provide for a robust and efficient insolvency eco-system in India. Over the years, IBC has gained prominence in terms of loan recovery. Among all modes of recovery, IBC has accounted for 43.0 per cent in the total amount recovered in 2022-23 (Trend & Progress of Banking in India, RBI, December 2023). However, IBC is not merely to be seen as a loan recovery instrument; it must be construed as an instrument for preservation of economic value of assets through effective resolution in a unified and time bound manner. Hence, it is imperative that modern weapons are added to the IBC armory in order to strengthen its capacity for speedy resolutions.