Amitabh Kant, former CEO of NITI Aayog and G20 Sherpa, has recommended that India outsource court management for insolvency cases to private players in order to reduce delays and improve creditor recovery rates. Speaking at the Insolvency and Bankruptcy Board of India’s (IBBI) annual meeting, Kant emphasized the need for “second generation” reforms to strengthen the Insolvency and Bankruptcy Code (IBC), 2016. He also highlighted that the government is considering amendments to the IBC following a comprehensive review last year.
Kant pointed out that outsourcing court management, similar to the model used by Passport Seva Kendras run by Tata Consultancy Services, could minimize judicial workload on administrative matters and speed up the resolution process. This would help address the growing delays in insolvency resolutions at the National Company Law Tribunal (NCLT), which averaged 716 days in FY24, up from 654 days in FY23. The average time for case admission also increased to 650 days in FY22 from 468 days in FY21.
Kant warned that these delays are reducing creditor recovery, with recovery rates dropping to 27% of admitted claims in FY24, compared to 36% in FY23. He called for tribunal process re-engineering and urged private sector involvement to improve court management and integrate technological advancements.
Furthermore, Kant stressed the importance of a cross-border insolvency framework as Indian companies become increasingly involved in global value chains. He urged for clear amendments to the IBC that would address ambiguity in legal principles, particularly regarding the supremacy of the Committee of Creditors’ commercial decisions and the NCLT’s role in admitting petitions without discretion when a financial debt exists.
Kant also noted that the government is considering an amendment allowing a Record of Default (RoD) certificate issued by National E-Governance Services Ltd (NeSL) to be used as proof of default without additional deliberation.
At the same event, IBBI Chairperson Ravi Mital highlighted the challenges creditors face, including substantial delays and losses, noting that many cases admitted under the IBC have already lost over 50% of their value by the time they reach the tribunal. Mital clarified that delays under the IBC occur because it is a creditor-led model, with debtors often trying to prevent their cases from being admitted.
As of June 30, 7,813 corporate insolvency cases have been admitted under the IBC, with 33% resulting in liquidation, 13% being resolved, and 25% still ongoing.
