The Indian insolvency regime in practice-an analysis of insolvency and debt recovery proceedings

Abstract

This paper analyses 45 cases of insolvency and bankruptcy resolution in order to measure the efficiency and problems of the present laws for firm bankruptcy in India. These cases have been selected to cover a month of judgements under the reorganisation provisions of the Sick Industrial Companies Act, (SICA) 1985, the winding up provisions of Companies Act, 1956, and the debt enforcement provisions of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act (SARFAESI), 2002. I find that the time taken from the start of the application to the final judgement was over 10 years for more than 40% of the cases heard at the High Court. Winding up of companies or debt recovery took more than 5 years. The analysis identifies the underlying themes driving these delays as conflicts arising from having multiple laws to protect the interests of the debtor and different stakeholders, conflicts from having these different laws being implemented in the Civil Courts and Tribunals, and the pro-rehabilitation stance of the adjudicators in resolving insolvency and bankruptcy.