433 days – Average Time for a Resolution in IBC
The Reserve Bank of India (RBI) has recently released the financial stability report. As per the report, the corporate insolvency resolution process (CIRPs) took an average time of 433 days for resolution as of September 2020.
- Insolvency and Bankruptcy Code (IBC) has prescribed a maximum period of 330 days for a resolution. This limit was fixed as per an amendment in IBC Code that was made in the year 2019.
- The average time taken for resolutions is clearly much more than the limit prescribed in the Insolvency and Bankruptcy Code (IBC).
- As per the report, 43.56% of the claims by financial creditors have realized through CIRPs.
- The initial delay in the processes is due to some unsettled issues of interpretation. Now, the ecosystem is becoming familiar with the system.
Pre-pack Insolvency Framework
A panel set up under M S Sahoo has submitted its report to the government on the pre-pack insolvency framework with an aim to reduce the time taken for the insolvency process. A pre-packaged insolvency resolution allows a firm to make a restructuring plan in coordination with creditors before starting insolvency proceedings. This helps in reducing the time as well as the cost involved in the process. M S Sahoo is the chairman of the Insolvency and Bankruptcy Board of India (IBBI).