How to make insolvency law solvent

The IBC has served the purpose by creating the fear of god among rogue promoters. It's time to plug the loopholes in the law and make the defaulters understand that the IBC isn't just all bark and no bite

- TAMAL BANDYOPADHYAY

"O Government, that madest this hugely useful insolvency law, when will it be ready to clear our case fast? How long, O Supreme Court, how long?" It won't be a surprise if the Vedanta group says this, rephrasing a sentence from George Bernard Shaw's play, Saint Joan. The provocation for this prayer? The inordinate delay in the insolvency proceedings.

The insolvency proceedings against Venugopal Dhoot's Videocon group kicked off in August 2019 when the National Company Law Tribunal (NCLT) allowed for the consolidation of the corporate debtors.

In October 2019, an expression of interest (EOI) was invited from prospective bidders. A month later, Vedanta Ltd submitted its EoI and, a year later, in November 2020, a Vedanta group company, Twin Star Technologies Ltd (TSTL), submitted the final resolution plan. It was a 2,962 crore bid, including non-convertible debentures.

In December 2020, TSTL was identified as the successful bidder; the committee of creditors approved the resolution plan with 95.09 per cent favouring it. The NCLT gave its okay in June 2021, but the National Company Law Appellate Tribunal (NCLAT) reversed the NCLT judgment in January 2022.TSTL immediately moved the Supreme Court with its appeal. Over two years later, nothing has happened.

The last we heard about this case was in April 2023 when TSTL urged the Supreme Court to dismiss an appeal filed by former Videocon Industries Ltd Chairman Venugopal Dhoot against its bankruptcy court-approved bid to acquire Videocon along with its 12 group companies. Dhoot had challenged the TSTL bid in the apex court and sought a direction to banks to accept his ₹31,789 crore resolution plan. Going by TSTL's argument, Dhoot had always tried to "disrupt and derail" the insolvency proceedings through "vexatious and frivolous" legal proceedings.

This is not a unique case. There have been many such instances. They illustrate what ails the insolvency process in India.