January 30, 2021 1:27:33 am
The Economic Survey 2020-21 said that the Insolvency and Bankruptcy Code (IBC) is facing significant challenges due to litigation by various parties and a lack of adequate judicial infrastructure.
The Survey noted that the legal system was the single most important method of dispute resolution and that India was still lagging on a number of key indicators on resolution, including time taken for enforcement of contracts and cost of litigation.
The government had in June last suspended the initiation of insolvency proceedings against companies for defaults occurring after March 25, 2020, with the aim of preventing otherwise viable businesses from facing liquidation due to the economic downturn caused by the Covid-19 pandemic.
The Survey noted that the number of outstanding corporate insolvency cases under the IBC declined between March and December due to resolution of some pending cases and the suspension of insolvency initiation.
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