Bankruptcy cases: What India can learn from UK’s urgent list system for fast resolutions
India could learn valuable lessons from the UK’s urgent list system for bankruptcy cases. With judges possessing a deep understanding of insolvency legislation and practical realities, the UK’s approach ensures complex and contentious cases are directed to specialised courts for faster resolution. “Insolvency cases need timely attention because there are often urgent matters to be dealt with, such as employee concerns, safety issues, and stock price movements. In such instances, someone needs to take control of the company quickly. We are able to appoint administrators outside of court, resulting in fewer delays. In addition, we can approach the insolvency courts on an urgent basis and receive prompt decisions,” says Kanika Kitchlu-Connolly, Partner at TLT’s India Group, a well-known law firm based in the UK. Connolly suggests that India could adopt a similar model to expedite insolvency proceedings and empower judges with technical knowledge and commercial acumen for more effective outcomes. In the UK, if the county court lacks insolvency expertise or if the case becomes complex or contentious, it will be referred to the next largest county court with the required expertise. The High Court may also hear cases that are particularly difficult or of high value. In addition, the High Court has specialised lists for bankruptcy. The judges presiding over these cases are experts in insolvency law; they are known as ICC judges (insolvency and companies court judges) and possess the technical knowledge, technical expertise, and commercial understanding relevant to insolvency matters,” adds Connolly. IBC, once hailed as a game-changer, is now grappling with delayed decisions and conflicting judgments, posing significant challenges to the insolvency process. Under the IBC, the National Company Law Tribunal (NCLT) is entrusted with the task of ascertaining the occurrence of default within 14 days of receiving an insolvency application. This milestone has been breached to an alarming 140 days, and in a few cases, crossing 1,400 days, causing significant delays in the process. Adding to the complexity, numerous proceedings are deliberately initiated before the NCLT to intentionally delay the progress of the insolvency processes. A lawyer expresses concern about the occurrence of creditors submitting baseless objections, and the courts frequently consider and entertain such petitions. Vidarbha Vs. Axis Bank case has also led to confusion over the admission of applications under Section 7 of the IBC. The Supreme Court ruled that the NCLT and NCLAT were mistaken in assuming that such applications must be admitted solely based on the presence of debt and default by the corporate debtor. The Court’s interpretation of the word “may” in Section 7(5)(a) suggested that it is not a mandatory provision, giving NCLTs discretion to admit or reject applications based on grounds presented by the corporate debtor. This has introduced uncertainty and prolonged the admissions process. IBC, once hailed as a game-changer, is now grappling with delayed decisions and conflicting judgments, posing significant challenges to the insolvency process. Under the IBC, the National Company Law Tribunal (NCLT) is entrusted with the task of ascertaining the occurrence of default within 14 days of receiving an insolvency application. This milestone has been breached to an alarming 140 days, and in a few cases, crossing 1,400 days, causing significant delays in the process. Adding to the complexity, numerous proceedings are deliberately initiated before the NCLT to intentionally delay the progress of the insolvency processes. A lawyer expresses concern about the occurrence of creditors submitting baseless objections, and the courts frequently consider and entertain such petitions. Vidarbha Vs. Axis Bank case has also led to confusion over the admission of applications under Section 7 of the IBC. The Supreme Court ruled that the NCLT and NCLAT were mistaken in assuming that such applications must be admitted solely based on the presence of debt and default by the corporate debtor. The Court’s interpretation of the word “may” in Section 7(5)(a) suggested that it is not a mandatory provision, giving NCLTs discretion to admit or reject applications based on grounds presented by the corporate debtor. This has introduced uncertainty and prolonged the admissions process. IBC, once hailed as a game-changer, is now grappling with delayed decisions and conflicting judgments, posing significant challenges to the insolvency process. Under the IBC, the National Company Law Tribunal (NCLT) is entrusted with the task of ascertaining the occurrence of default within 14 days of receiving an insolvency application. This milestone has been breached to an alarming 140 days, and in a few cases, crossing 1,400 days, causing significant delays in the process. Adding to the complexity, numerous proceedings are deliberately initiated before the NCLT to intentionally delay the progress of the insolvency processes. A lawyer expresses concern about the occurrence of creditors submitting baseless objections, and the courts frequently consider and entertain such petitions. Vidarbha Vs. Axis Bank case has also led to confusion over the admission of applications under Section 7 of the IBC. The Supreme Court ruled that the NCLT and NCLAT were mistaken in assuming that such applications must be admitted solely based on the presence of debt and default by the corporate debtor. The Court’s interpretation of the word “may” in Section 7(5)(a) suggested that it is not a mandatory provision, giving NCLTs discretion to admit or reject applications based on grounds presented by the corporate debtor. This has introduced uncertainty and prolonged the admissions process. IBC, once hailed as a game-changer, is now grappling with delayed decisions and conflicting judgments, posing significant challenges to the insolvency process. Under the IBC, the National Company Law Tribunal (NCLT) is entrusted with the task of ascertaining the occurrence of default within 14 days of receiving an insolvency application. This milestone has been breached to an alarming 140 days, and in a few cases, crossing 1,400 days, causing significant delays in the process. Adding to the complexity, numerous proceedings are deliberately initiated before the NCLT to intentionally delay the progress of the insolvency processes. A lawyer expresses concern about the occurrence of creditors submitting baseless objections, and the courts frequently consider and entertain such petitions. Vidarbha Vs. … Read more
