Companies can look at voluntary insolvency process to increase productivity, maximise value: IBBI chief

IBBI main Ravi Mital connected Thursday said companies successful India person not learnt however to usage the insolvency instrumentality and pitched for efforts to guarantee that much companies opt for the voluntary solution process to summation productivity.

The Insolvency and Bankruptcy Code (IBC), which provides for a market-linked and time-bound solution of stressed assets, came into unit successful 2016.

So far, astir of the insolvency solution processes person been initiated by creditors portion successful examination voluntary applications person been less.

Speaking astatine a league organised by manufacture assemblage Assocham and accounting assemblage CPA Australia successful the nationalist capital, Mital said creditors person recovered astir Rs 3.6 lakh crore has been recovered by creditors nether the IBC successful the past 8 years.

The Insolvency and Bankruptcy Board of India (IBBI) is simply a cardinal instauration successful implementing the IBC.

Emphasising that creditor-debtor narration has changed with the implementation of the Code, Mital said cases involving debts worthy Rs 11 lakh crore person been settled adjacent earlier getting admitted for the insolvency solution process.

"It is preferrable that companies themselves travel into insolvency... That is wherever we marque maximum value, that is wherever worth demolition is the least...," Mital said.

In India, insolvency cases are initiated by creditors against companies.

"In the developed world, astir of the applications nether insolvency are voluntary applications. In the US, we telephone it Chapter 11," Mital said.

He besides said it means successful the US and different developed countries, insolvency is not an adversarial process. In India, it is creditors which record for insolvency solution process, past it becomes an adversarial process, "I deliberation companies successful India person not learnt connected however to usage insolvency to marque (them) much productive... If Assocham wants, IBBI is consenting to collaborate to person a treatment with them to spot the problems they are facing.

"Why are companies not coming forward? Why are we not getting Section 10 applications? There indispensable beryllium a reason... We are consenting to speech to companies... To spot if determination are problems, roadblocks, we volition effort to resoluteness that," Mital said.

Section 10 of the IBC pertains to voluntary insolvency solution process.