India’s IBC Reforms Target Faster Insolvency With 90-Day NCLAT Appeal Deadline

A parliamentary committee has pushed for a major speed boost in India’s bankruptcy process. The committee recommended a strict three-month deadline for the National Company Law Appellate Tribunal to decide appeals. This change is part of a wider set of reforms to the Insolvency and Bankruptcy Code.The Lok Sabha select committee reviewed the proposed IBC Amendment Bill. Their goal is to cut delays that hurt the rescue of distressed companies. The report was tabled in Parliament this week.

Key Recommendations to Streamline Resolution

The committee, led by BJP MP Baijayant Panda, identified appellate delays as a critical flaw. According to their report, the absence of a statutory timeline for NCLAT has caused significant holdups. These delays affect appeals against rejected claims and approved resolution plans.The panel stated that such delays undermine the entire system’s efficiency. They formally recommended that NCLAT “shall dispose of an appeal within three months from the date of its receipt.” This binding timeline aims to create more certainty for creditors and buyers.Another major recommendation bars resolution professionals from becoming liquidators for the same company. The committee found a potential conflict of interest. A resolution professional paid a fee might prefer liquidation, where payment is a share of sale proceeds.

Broader Impact on Business and Recovery

The proposed amendments introduce futuristic concepts like group insolvency and cross-border proceedings. These frameworks are designed for complex modern corporate structures. They aim to coordinate decisions when multiple related companies are in trouble.Experts note the bill introduces a Creditor-Initiated Insolvency Resolution Process. This provides an out-of-court mechanism for genuine business failures. It is meant to be cost-effective and cause minimal disruption.The reforms also empower creditors to pursue questionable pre-bankruptcy transactions. This can happen even if the resolution professional does not act. It strengthens the ability to recover assets diverted by previous management.

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The push for a strict 90-day NCLAT deadline is a cornerstone of the latest IBC reforms. If passed, these changes could significantly accelerate India’s corporate rescue landscape. The focus remains on value maximization and timely resolutions.

A quick knowledge drop for you:

What is the main change proposed for NCLAT?

The select committee recommends a strict three-month deadline for the appellate tribunal to decide any appeal. This aims to prevent the lengthy delays currently seen in the insolvency process.

Why can’t a resolution professional become the liquidator?

The committee identified a perverse incentive. A resolution professional on a salary might push for liquidation where they earn a percentage of asset sales, which is not always in the best interest of maximum recovery.

What is the ‘group insolvency’ framework?

It is a new provision to handle the insolvency of multiple companies within the same business group. This allows for coordinated decision-making, which is crucial for complex corporate structures.

How does the bill help recover lost assets?

It extends the ‘look-back’ period for reviewing dubious transactions to two years before the first insolvency application was filed, not from the admission date. Creditors can also initiate these reviews.

What is the CIIRP mentioned in the bill?

CIIRP stands for Creditor-Initiated Insolvency Resolution Process. It is an out-of-court mechanism designed for faster, cheaper resolution of genuine business failures with less judicial hassle.