The Insolvency and Bankruptcy Code has segregated judicial and commercial aspects of the insolvency process whereby stakeholders have the right to decide on what suits them, IBBI chairperson M S Sahoo said as per the PTI report.
The Code, which became operational in December last year, provides for a market-determined and time-bound insolvency resolution process. The Insolvency and Bankruptcy Board of India (IBBI) is implementing the Code.
Sahoo said there is an oversight mechanism, that includes IBBI and National Company Law Tribunal (NCLT), to facilitate the transaction that a market participant wishes to do while the approval of insolvency resolution plan is done by the stakeholders concerned.
"The IBC actually has segregated commercial aspects and judicial aspects ... It has put commercial aspects in the hands of stakeholders, judicial aspects with the tribunal and with all that it has put a time line with firm consequences," Sahoo said here.
In case the process is not completed within 180 days time, then the company concerned would go into liquidation.
"That is the disincentive if they don't do it within the time line. The incentive is that they stand to gain if the process goes through and they have the right to take the decision on what suits them the most," he noted.
More than 150 transactions are going on under the Code.
Sahoo was speaking at an event organised by industry body Assocham.
He also said that merely making rules and regulations is not adequate unless there are facilitators in the system.
"Since 1992, we have been talking about economic liberty but we are yet to build very sophisticated institutions for promotion and protection of this liberty," he was quoted as saying in a release issued by Assocham.
Amardeep Singh Bhatia, joint secretary at the corporate affairs ministry, said the increase in capacity of the NCLT and the NCLAT (National Company Law Appellate Tribunal) is a work in progress. There would be more benches and members joining in, he added.