Review insolvency code regulations, NCLT tells bankruptcy board

The National Company Law Tribunal (NCLT) has suggested to IBBI that there is a need to review the insolvency code regulations to ensure that they are not “misused or misinterpreted“.

It also said that the resolution professional (RP) should be competent and independent so that there are no interruptions in the process which lead to delays in disposal of insolvency cases.

‘Claims ignored’

Besides, it has said that the claims of operational creditors are neglected or ignored as the Committee of Creditors (CoC) (banks and financial institutions) have control over the entire process.

Nobody is taking care of operational creditors’ claims, said the NCLT Kolkata Bench in its order passed last week on the Binani Cement matter.

“It is time to recognise their voice also in the committee of creditors,” it said, suggesting changes to the Insolvency and Bankruptcy Board of India (IBBI).

In the 60-page order, the tribunal has also raised concern about the functioning of RPs, saying it has been receiving several pleas from stakeholders on issues such as transparency, arbitrariness and delays in the process. “The adjudicating authority (NCLT) is facing too much interruption from various stakeholders. Till date we have never come across any frivolous application. All come with a genuine grievance. All challenge the independence of the resolution professional and lack of transparency, competency and arbitrariness in the matter of resolution process,” said NCLT.

Citing Binani Cement case, NLCT said: “In the case in hand, 12 applicants came forward ...for not following the process mandated under the code by the resolution process. The arbitrary way of dealing with the cases has always led to interruptions and also caused delay in disposal of cases.”