an in in ndia       12.21
              increasing the ultimate recapitalization      professionals necessary for the process to work. A
              bill for the government and the associated    large number of cases have entered the insolvency
              political difficulties. Delay is also costly  process. By January 2018, over 525 cases of
              for the economy, because impaired banks       corporate insolvency have been admitted across all
              are scaling back their credit, while stressed the National Company Law Tribunal (NCLT), as
              companies are cutting their investments.      per the Economic Survey 2017-18.
        (vii) Progress may require a PARA. The ARCs               A major factor behind the effectiveness of
              (Asset Reconstruction Companies)              the new Code has been the adjudication by the
              haven’t proved any more successful            Judiciary—it prescribes strict time limits for various
              than banks in resolving bad debts. But        procedures under it. In spite of the large inflow of
              international experience shows that a         cases to NCLT benches across India, these benches
              professionally run central agency with        have been able to admit or reject applications for
              government backing (not without its           CIRP admissions with few delays. In addition,
              own difficulties) can provide the solution    appellate courts, including the NCLAT, High
              in this regard.                               Courts and the Supreme Court have also disposed
          By late February 2017, Government hinted          appeals quickly and decisively. In this process, a
     towards its interest to the idea of PARA. But before   rich case-law has evolved, reducing future legal
     the idea takes shape several related issues are to be  uncertainty. In the CIRP, the Committee of
     settled by the government, such as—its funding         Creditors (CoC) invites resolution plans from
     mechanism; selection of the companies for their        resolution applicants, and may select one of these
     balance sheet resolution; recovery mechanism of        plans. The Code originally does not specify any
     the banks’ NPAs; etc. among others.                    restrictions on who these resolution applicants
                                                            might be though it declares some persons are
        Insolvency and BankruPtcy                           ineligible to submit resolution plans—
     By now several measures were put in place by the            (i) an undischarged insolvent;
     Government/RBI to resolve the ‘twin balance                (ii) a wilful defaulter;
     sheet’ (TBS) crisis faced by the economy but              (iii) a borrower whose account has been
     they could not bring out effective results. Finally,             identified as a non-performing asset for
     we see the Government moving to make the                         over a year and who has not repaid the
     insolvency procedure effective to address the                    amount before submitting a plan;
     issue. The lenders (banks) and borrowers (private          (iv) a person convicted of an offence
     corporate sector) both have been paying a high                   punishable with two or more years of
     financial cost of country’s complex and time-                    imprisonment;
     taking process of insolvency and bankruptcy
                                                                 (v) a person disqualified as a director under
     process. The new Insolvency and Bankruptcy
                                                                      the Companies Act, 2013;
     Code, 2016 (IBC) was amended and enforced
     by the Government in November 2017. There                  (vi) a person prohibited from trading in
     has been a significant amount of progress in this                securities;
     regard—the entire mechanism for the Corporate             (vii) a person who is the promoter or in the
     Insolvency Resolution Process (CIRP) has been                    management of a company which has
     put in place. A number of rules and regulations                  indulged in undervalued, preferential, or
     have been notified to create the institutions and                fraudulent transactions;