M.S. Sahoo, chairperson of Insolvency and Bankruptcy Board of India (IBBI) talks about the success of the IBC process, challenges and the way forward. Edited excerpts:
What’s the status of resolution of cases under the IBC in terms of resolution?
I don’t have the exact figures. I think about 40 corporate debtors... the process has yielded resolutions. In this 40, the creditors have got over ₹50,000 crore or so. The average realisation has been above 50%. The operational creditors have also got 50%.
Are corporates undermining the IBC’s 270-day deadline by moving the courts?
If somebody has a right and thinks that he can establish his right by going to the court, we should not be aggrieved. That’s why we have court system in the country to sort out the differences. It’s not a cause for concern that people are going to court and courts are entertaining them. Is it that 100% of the cases are going to court and getting delayed?
Our experience suggests that very few, say 20 out of 1,000 cases, have gone to court. Number of cases going through lengthy court process is very less.
But, isn’t it delaying the overall resolution process?
We have seen from our experience that issues that have gone to NCLT, NCLAT and Supreme Court have been sorted out by the Supreme Court forever. Last week, we saw Supreme Court order in the case of Jaypee Infra, which was about Section 29 (A) and home buyers. Then, there was an order on the scope of moratorium on the corporate guarantors in the SBI vs Ramakrishna case. I am referring to these two issues because they are dealing with the law which came in the last ordinance on June 6 and is yet to become an Act.
Even at this stage, the Supreme Court has dealt with provisions of the ordinance in these two orders, so this is the speed at which the courts are working.
Is it just a perception that no one is willing to take responsibility, with the RP passing it to CoC, CoC to NCLT, NCLT to NCLAT and NCLAT to SC?
No, it’s not that NCLT passes on to NCLAT and NCLAT to SC. NCLT takes a view and those who are aggrieved appeal to NCLAT and those who are aggrieved, appeal again to SC.
But you have to look at the data, what is the percentage of orders challenged at NCLAT, it’s about 5-7%. Again what’s the percentage of cases challenged at SC? It’s about 20-30%. You have to see it in totality. Some high profile cases create much more noise, but besides these, big cases also are getting resolved.
Does the NCLT’s acceptance of bids after closure of deadlines not hurt the sanctity of the IBC process?
You should ask that question to NCLT or whoever does it.
There were some instances in the past. You should look at the regulatory provisions and the amendments made on July 4 to the IBC regulations.
It very categorically states that the process, including the timeline and that plan received outside the system will not be considered. As we learnt from experience, we are trying to avoid those problems either by making laws, or SC sorts it out.
NCLT courts are not fully equipped to deal with such a large number of insolvency cases coming in. How do you address this concern?
It is not in the domain of the IBBI. We have seen that NCLT capacity is being increased over time. Today, we have 12 benches and new benches are being set up in Jaipur and Cuttack. Recruitment process has started to recruit more judges. Efforts are on to take new premises in New Delhi and Mumbai.
The progress in on and the government is taking efforts to create capacity to meet the number of cases.