SC: Insolvency and bankruptcy cases must be decided within 330 days

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NEW DELHI: The Supreme Court said on Monday that the 330-day deadline for the resolution plan must be strictly adhered to and that NCLT and NCLAT must decide insolvency and bankruptcy issues with sanctity in mind of the time limit provided for by the legislature.
A SC bench led by Judge DY Chandrachud said the previous bankruptcy code had failed mainly due to long delays in litigation in court proceedings and vowed that the current IBC will not be allowed to suffer the same fate .
“Once the creditors’ committee has submitted a resolution plan for an asset subject to stress under the Insolvency and Bankruptcy Code, it cannot be amended or withdrawn by the resolution applicant,” said the SC.
Meanwhile, responding to a question about the steep haircuts taken by banks in resolving some bankruptcy cases, RBI Governor Shaktikanta Das said last week that the Insolvency and Bankruptcy Code process (IBC) was to be improved, which will also include legislative changes.
“Yes, I agree that it is possible to improve the functioning of the IBC and its framework. There may also be a need for some legislative amendments,” he said.
The RBI has some suggestions it has reported to the government, he said, citing an example of the time it takes before a case is admitted by a National Company Law Tribunal (NCLT) and resolved by court-ordered measures and suggested that the same can be dealt with through legal amendments.
He said overall recoveries from the IBC process were 45% at the global level four years ago and fell to 40% in the pandemic year, and also acknowledged that in some cases lenders have had to cutbacks. of hair up to 90 percent.
“There are opportunities for improvement and the time taken in the whole process, I totally agree, must be reduced by simplifying certain procedures and, where necessary, by making legislative changes”, Das said.
(With contributions from agencies)



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