Insolvency and Bankruptcy Reforms in India

Description

This book is about the establishment of the Insolvency and Bankruptcy Code, in 2016, one of the most important new developments in Indian commercial law. The law has major implications for firms, their creditors, and a variety of the professional services that feed into the decisions of borrowers and lenders including lawyers, accountants and valuers. A new profession of insolvency professionals has come to exist owing to the law. There are several questions about bankruptcy reform in the mind of researchers, policy makers and practitioners. How has the reform progressed? How has it reshaped the incentives of firms? What are the difficulties faced? What are the optimal paths for borrowers and lenders and their advisors under the rubric of the law? How should laws and institutions be modified? The book has a unique set of chapters, by key people who have shaped the field which offer novel insights into these questions. The book has been edited by key people who have worked on bankruptcy reform since 2010. Dr. Sahoo has been the chairperson of the Insolvency and Bankruptcy Board of India since the establishment of this regulatory agency. Dr. Thomas was a member of the Bankruptcy Law Reforms Committee which drafted the IBC, and led the internal team of the BLRC which drafted the law. The book is an authentic and credible analysis of the happenings in the Indian insolvency and bankruptcy ecosystem from the start, with interest areas for international and domestic, economics/finance and law, researcher and practitioner communities. Foreword Acknowledgements Contents Editor and Contributors Acronyms An Overview 1 The Questions Addressed by the Chapters of This Book 2 Looking Ahead References An Early Examination of the RBI–12 Cases Under the IBC 1 Introduction 2 The Evolution of Insolvency Reform in India 3 The RBI-12 Cases Under the IBC 4 Challenges that the RBI-12 Presented to IBC 4.1 Section 29A: The Dilemma of Promoter Involvement 4.2 Repeated Failure of Time Bound Resolution 4.3 Anti-liquidation Bias 4.4 Lack of Commercial Consensus 4.5 The Errant Bidder 5 Some Learnings References Real Estate Insolvencies and the Status of Home Buyers 1 Introduction 2 The `Uniqueness' of the Indian Real Estate Sector 2.1 Credit Access 2.2 Financial Distress 2.3 The Insolvency Stage 3 Impact on the IBC Processes 3.1 Impact on Timelines 3.2 Impact on CoC Decision-Making 3.3 Impact on Procedural Litigation 4 Consumers as Creditors in Other Jurisdictions 4.1 U.K. 4.2 U.S.A 4.3 Australia 5 Consumer Protection Legislations 5.1 U.K. 5.2 U.S.A 5.3 Australia 6 Consumer Protection and Insolvency 7 Conclusion References Performance of Company Law Tribunals in India 1 Introduction 2 A Description of the NCLT 2.1 Workload 3 Judicial Performance Measurement 3.1 Can Court Performance Be Measured? 3.2 The Legal Perspective 3.3 The Economic Perspective 3.4 Performance Measurement in Some Jurisdictions 3.5 Performance Measures for the NCLT 3.6 Modelling Duration in Court Proceedings 4 Estimating NCLT Performance 4.1 Data 4.2 Duration 4.3 Pendency 4.4 Outflow Rate 4.5 Delay 4.6 Cost 5 Discussion 5.1 Delay Due to Extra Steps 5.2 Delay Due to Failed Hearings 5.3 Systems and Processes 5.4 Capacity Constraints 5.5 Ongoing Reform Efforts 5.6 Eliminating Wasteful Hearings 5.7 Planning 5.8 Rethinking Processes 5.9 Culture 5.10 Future Work 6 Conclusion References A Maximalist Approach to Data Under IBC 1 Introduction 2 The U.S. Experience 2.1 Starting Points 2.2 An Emerging Literature 2.3 Critiques About Data 2.4 BAPCPA 2.5 Some Lessons 3 Data for India's Insolvency and Bankruptcy System 3.1 What Data Should Be Collected? 3.2 Allocating the Responsibility for Data 3.3 Ensuring Standardization and Availability 4 Conclusion and A Proposal References Prepacks Under the IBC: A Tussle Between Speed and Fair Process 1 Introduction 2 What Are Prepacks? 3 Are Prepacks Permitted Under the IBC? 4 The Experience of Prepacks in Other Jurisdictions 5 Should Prepacks Be Permitted Under the IBC? 6 Conclusion References The Way Forward for Personal Insolvency 1 Introduction 2 The Indian Credit Market 3 The Need for Personal Insolvency 3.1 The Individual Credit Market Is Growing 3.2 Stress Is Building 3.3 Loan Waivers Are Rising 3.4 Legal Processes for Recovery Are Weak 3.5 Coercive Collection Is Prevalent 3.6 This Has an Adverse Impact on the Credit Market 4 An Overview of Personal Insolvency in the IBC 4.1 Eligibility 4.2 Processes 4.3 Role of Secured Creditors 4.4 Priority 4.5 The Role of the DRT 5 The Way Forward 5.1 Policy Issues 5.2 Institutional Infrastructure: Courts 5.3 Institutional Infrastructure: Information Utility 5.4 Institutional Infrastructure: Intermediaries 6 Conclusion References Value Destruction and Wealth Transfer Under the Insolvency and Bankruptcy Code, 2016 1 Introduction 2 An Overview of IBC 2.1 Research Questions 3 Value Destruction Problem 3.1 Economic Distress, Financial Distress 3.2 Basic Objectives of Insolvency Law 3.3 Sources of Value Destruction 3.4 Value Destruction Under IBC 4 Wealth Transfer Problem 4.1 Going Concern Sale, Restructuring 4.2 Sources of Wealth Transfer 4.3 Wealth Transfer Under IBC 5 Conclusion References