Little over five years after its enactment, the Insolvency and Bankruptcy Code (IBC), which provides a time-bound and market-linked framework for resolution of stressed assets, has passed the constitutional muster.
In Sahoo’s words, with every judgement of the Supreme Court, the Code has developed deeper and stronger roots, and probably boasts of the largest body of case laws.
In value terms, the Code has rescued 70 per cent of distressed assets through insolvency resolution plans and has released remaining 30 per cent of such assets through liquidations.
Sahoo, who has been at the helm of the Insolvency and Bankruptcy Board of India (IBBI) since its inception in October 2016, said the Code is changing the way the society perceives business failures.
IBBI is a key institution in implementing the Code.
According to the IBBI chief, by rescuing viable businesses through the insolvency process, closing unviable ones through liquidation, and facilitating voluntary liquidations, it is releasing the entrepreneurs from honest business failures.
“Firms, which may fail to withstand market pressures, would need to use the Code for either a re-organisation of business or a clean and dignified exit. ‘Failing in succeeding’ will soon be the new mantra for budding entrepreneurs in the country. Days are not far ahead when we will celebrate failure,” Sahoo said.
Since the provisions of the Corporate Insolvency Resolution Process (CIRP) came into force on December 1, 2016, a total of 4,376 CIRPs have commenced till the end of March this year.
Out of the total, 2,653 have been closed, including 348 CIRPs that ended in approval of resolution plans. As many as 617 CIRPs were closed on appeal or review or settled, while 411 were withdrawn and 1,277 ended in orders for liquidation, as per IBBI’s latest quarterly newsletter.