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The Indian insolvency regime in practice-An Analysis of insolvency and debt recovery proceedings

Author

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  • Aparna Ravi

    (Centre for Law and Policy Research, Bangalore)

Abstract

This paper analyses 45 cases of insolvency and bankruptcy resolution in order to measure the efficiency and problems of the present laws for firm bankruptcy in India. These cases have been selected to cover a month of judgements under the reorganisation provisions of the Sick Industrial Companies Act (SICA) 1985, the winding up provisions of Companies Act, 1956, and the debt enforcement provisions of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act (SARFAESI), 2002. I find that the time taken from the start of the application to the final judgement was over 10 years for more than 40 of the cases heard at the High Court. Winding up of companies or debt recovery took more than 5 years. The analysis identifies the underlying themes driving these delays as conflicts arising from having multiple laws to protect the interests of the debtor and different stakeholders, conflicts from having these different laws being implemented in the Civil Courts and Tribunals, and the pro-rehabilitation stance of the adjudicators in resolving insolvency and bankruptcy.

Suggested Citation

  • Aparna Ravi, 2015. "The Indian insolvency regime in practice-An Analysis of insolvency and debt recovery proceedings," Indira Gandhi Institute of Development Research, Mumbai Working Papers 2015-027, Indira Gandhi Institute of Development Research, Mumbai, India.
    • Handle: RePEc:ind:igiwpp:2015-027
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    File URL: http://www.igidr.ac.in/pdf/publication/WP-2015-027.pdf
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    Citations

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    Cited by:

    1. Rajeswari Sengupta & Anjali Sharma & Susan Thomas, 2016. "Evolution of the insolvency framework for non-financial firms in India," Working Papers id:11054, eSocialSciences.
    2. Rajeswari Sengupta & Harsh Vardhan, 2023. "Bankruptcy regime change and credit risk premium on corporate bonds: Evidence from the Indian economy," Indira Gandhi Institute of Development Research, Mumbai Working Papers 2023-001, Indira Gandhi Institute of Development Research, Mumbai, India.
    3. Banerjee, Sudipto & Sane, Renuka & Sharma, Srishti & Suresh, Karthik, 2022. "History of disinvestment in India: 1991-2020," Working Papers 22/373, National Institute of Public Finance and Policy.
    4. Sengupta, Rajeswari & Anjali Sharma, 2015. "Corporate Insolvency Resolution in India: Lessons from a cross-country comparison," Indira Gandhi Institute of Development Research, Mumbai Working Papers 2015-029, Indira Gandhi Institute of Development Research, Mumbai, India.
    5. M S Mohanty & Suresh Sundaresan, 2018. "FX hedging and creditor rights," BIS Papers chapters, in: Bank for International Settlements (ed.), The price, real and financial effects of exchange rates, volume 96, pages 19-36, Bank for International Settlements.
    6. Sreyan Chatterjee & Gausia Shaikh & Bhargavi Zaveri, 2017. "Watching India's Insolvency Reforms: A New Dataset of Insolvency Cases," Working Papers id:12105, eSocialSciences.
    7. Sreyan Chatterjee & Gausia Shaikh & Bhargavi Zaveri, 2017. "Watching India's insolvency reforms: A New dataset of insolvency cases," Indira Gandhi Institute of Development Research, Mumbai Working Papers 2017-012, Indira Gandhi Institute of Development Research, Mumbai, India.

    More about this item

    Keywords

    Bankruptcy law reforms; Maximise economic value; Collective default resolution; Debt enforcement; Conflicts in law; Conflicts in adjudication; Multiple adjudicating fora; Unified insolvency and bankruptcy resolution; Case law;
    All these keywords.

    JEL classification:

    • G33 - Financial Economics - - Corporate Finance and Governance - - - Bankruptcy; Liquidation
    • K22 - Law and Economics - - Regulation and Business Law - - - Business and Securities Law

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