Insolvency and Bankruptcy Code should be the preferred option for resolution of bad loans, not the last resort | The Indian Express

Insolvency and Bankruptcy Code should be the preferred option for resolution of bad loans, not the last resort | The Indian Express

Written by Ishan Bakshi |Updated: November 20, 2019 9:29:02 am

ishan.bakshi@expressindia.com

Insolvency and Bankruptcy Code should be the preferred option for resolution of bad loans, not the last resort

The introduction of the IBC marked a structural change in the resolution architecture in India. The shift to a time-bound resolution process was a tool to help tackle the bad loan problem.

SC rejected Essar Steel’s plea for compensation. (File Photo)

The Supreme Court judgment in the Essar Steel case has restored the primacy of the committee of creditors (CoC), settling the contentious issue of the distribution of funds between creditors. While the judgment solidifies one of the tenets of the IBC (Insolvency and Bankruptcy Code), does it pave the way for smoother functioning of the resolution process? And does it alter the incentive structure for various stakeholders that have complicated the process so far?