FAST TRACK CORPORATE INSOLVENCY RESOLUTION PROCESS: THE WAY AHEAD
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Fast track Insolvency Resolution Process, Insolvency & Bankruptcy Code-2016Abstract
The insolvency resolution process in India has in the past involved the simultaneous operation of several statutory instruments. These include the Sick Industrial Companies Act, 1985, the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, the Recovery of Debt Due to Banks and Financial Institutions Act, 1993.
A plethora of legislation dealing with insolvency and liquidation led to immense confusion in the legal system, and there was a grave necessity to overhaul the insolvency regime. There is lot more strain on the Indian credit system, as is evidenced from the prevailing legal and institutional framework which does not aid or help the lenders for the effective and timely recovery or even restructuring of defaulted assets.
Each Insolvency Resolution Process (IRP) must be carried out within the maximum period set in the Code. However, this is the time taken for the resolution of a very complex entity, where complexity may come in the structure of liabilities and assets, or size of operations. The researcher in this article deals with the fast track insolvency resolution process wherein the entities are likely to have a less complex structure in these aspects. Therefore, their insolvency is likely to take a shorter time to resolve. The criterion for invoking Fast Track Resolution depends on the corporate debtor’s assets, income and nature of creditors or quantum of debt. The entire process is completed within 90 days. However, the NCLT may, if satisfied, extend the period of 90 days by another 45 days.
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