Author details
Fathima fidha kt
4th year BBA LLB Hons
Lovely Professional University, Punjab
Abstract
The Insolvency and Bankruptcy Code, 2016 (IBC) was a significant reform enacted to reform India’s fragmented and inefficient insolvency regime. Prior to the Code’s enactment, India had poor rankings in global metrics measuring insolvency resolution, with average resolution times exceeding four years and low recovery rates. One of the promises of the IBC was to achieve a time-bound resolution of corporate insolvencies, which would maximize asset approvals, inspire entrepreneurial activity, and enhance the confidence of creditors.
Section 12 of the Code imposes a maximum of 180 days for the completion of the corporate insolvency resolution process (CIRP), which may be extended to a total of 330 days including delays due to litigation. The intent of the legislature was evident – to avoid an undue delay in insolvency proceedings, and to protect the economic value of distressed firms.
Nevertheless, more than seven years after it was passed, strong doubts have been expressed about whether this resolution is in fact time-bound in practice. A number of reports by the Insolvency and Bankruptcy Board of India (IBBI) and Reserve Bank of India (RBI) indicate that many cases go well beyond statutory time limits and often take more than 500–600 days to conclude. There are also some well-known cases of insolvencies such as Essar Steel, Bhushan Steel and DHFL that underscore the divide between the promises of a legislation versus its reality on the ground. Delays in time-bound resolution may be attributed to a variety of factors including ongoing litigation, judicial interventions, lack of proper facilities and infrastructure in the National Company Law Tribunal (NCLT), and related issues in the debt resolution process. This paper explores the reality, as opposed to a ‘myth,’ of time-bound resolution under the IBC. It reviews the statutory framework, judicial interpretation of timelines, empirical evidence from case studies, and comparative perspectives from jurisdictions such as the United States, United Kingdom, and Singapore. The paper finds that while the IBC has improved recovery rates and changed the landscape of insolvency in India, the promise of time-bound resolution is largely one of aspiration at the moment. In conclusion, the paper proposes reforms to institutions, implementation of pre-packaged insolvency frameworks, and a stricter impediment to frivolous litigation to address the disconnect between legislative intentions and reality.
Key Words: Insolvency and Bankruptcy Code (IBC), 2016; Timely resolutions; Corporate Insolvency Resolution Process (CIRP); National Company Law Tribunal (NCLT); Insolvency and Bankruptcy Board of India (IBBI); Judicial interpretation; Recovery of stressed assets; Pre-packaged insolvency; Committee of Creditors (CoC); Delays of the insolvency proceedings.
Introduction
1. Background: The Need for Reform
Prior to the enactment of the Insolvency and Bankruptcy Code (IBC) in 2016, India’s insolvency regime was disintegrated across multiple laws, including the Sick Industrial Companies Act (SICA), the Recovery of Debts Due to Banks and Financial Institutions Act (RDDBFI), and the Companies Act, 1956. As a result, the insolvency processes in India led to long-winded litigation, overlapping jurisdiction, and minimal recoveries. In fact, according to the World Bank’s Ease of Doing Business Report, 2015, the average time to resolve insolvency was 4.3 years, recovering only 26 cents on a dollar basis. The IBC sought to unify the various insolvency laws into a single piece of legislation that governs corporate and individual insolvency by way of a structured procedure. The IBC aims to unify insolvency law, facilitate time-bound resolution of stressed assets, maximise asset value, encourage entrepreneurship and balance the interests of all stakeholders. The legislature was clear on the need for strict time limits, highlighting the fact that time was an enemy as the value of assets diminishes with every day of delays, leads to loss of confidence, and lessens the prospects of reviving the business.
2. Legislative Promise: Section 12 of the IBC
Section 12 of the Code mandates that the Corporate Insolvency Resolution Process (CIRP) has to be completed in not more than 180 days from the date the application is admitted. The timeframe can be extended for a maximum 90 days, provided that permission is received from the Adjudicating Authority, but in no case should the process exceed a total of 330 days taking into account litigation and other delays in court.
The 2019 amendment to the Code is seen as a legislative measure to address the concern of prolonged CIRPs that have been abused by various stakeholders (creditors, promoters, and resolution professionals) for various reasons. While contending with this concern, Parliament sought to send a clear message to all stakeholders—”insolvency processes cannot be unending.” Importantly, Parliament sought to reactivate or revitalize market discipline from a credit perspective and imposed a sense of urgency upon the stakeholders of insolvency processes.
3. Research Problem
Although there is clarity provided by legislation, reality is starkly different. Many CIRPs have gone way beyond the 330-day limit: for example, Essar Steel took over 866 days, while Bhushan Power & Steel took approximately 900 days to resolve the insolvency. Even in less complex CIRPs, litigation, capacity at NCLTs, and disputes between stakeholders have regularly extended timelines that are way outside the statutory framework.
This raises one vital question, namely, has the IBC fulfilled its core promise of time-bound resolution, or is this a more aspirational prospect than a reality? And if so, why: is it the legislative design, the judicial approach offered or the institutional framework?
4. Research Questions
To tackle the aforementioned concern, the following research questions are proposed:
- What is the legislative and judicial framework for time-bound resolution under the IBC?
- How have Indian courts (the Supreme Court and NCLAT) interpreted time limits set under Section 12?
- What does empirical research and case studies say about the actual timelines for CIRPs?
- How does India’s insolvency resolution framework compare to that of other jurisdictions?
- What reforms are necessary to create time-bound resolution in practice?
5. Hypothesis
The main hypothesis of this paper is: The principle of time-bound resolution under IBC is more myth than reality. The Code has improved recoveries and creditor-led processes, however, statutory deadlines often fail due to inefficiencies within the judiciary and institutions.
6. Research Methodology
This paper will adopt a doctrinal and empirical approach.
- Doctrinal Method: We will review statutory text, regulations, and amendments to capture the legislative framework in which IBC is situated.
- Analysis of Case Law: Judgments of the Supreme Court, NCLAT, and NCLT will be examined to understand how time-bound resolution is interpreted by the judiciary.
- Empirical Data: The review of the Institute of Insolvency and Bankruptcy Board of India (IBBI), Reserve Bank of India (RBI), and World Bank reports will be conducted to assess the practice.
- Comparative Method: Jurisdictions, such as the United States, United Kingdom, and Singapore, insolvency regimes will be assessed as lesson for Indian insolvency resolution practices.
- Analytical Method: Finally, critically assessing the time-bound resolution as ‘myth’ will involve reviewing the gap between legislative promise and practical reality.
7. Importance of the Study
This study holds significance for a number of reasons:
- From a policymakers perspective, it identifies the need to enhance institutional capacity.
- From a judiciary perspective, it underscores the need to balance speed against fairness.
- From a creditor and investor perspective, it evaluates whether courts using the IBC give credence to their interests.
- From a scholar perspective, it adds to the existing body of work on insolvency law in India.
8. Outline of the Paper
The paper is structured in eight sections. After the introduction in Section I, Section II addresses the legislative framework for time-bound resolution under the IBC. Section III focuses on judicial interpretations that have been introduced in the course of time, which have contributed to the understanding of timelines. In Section IV, empirical data and case studies are presented to highlight the reality on the ground. In Section V, a comparison of India’s framework is drawn with international practices. Section IV includes a critical analysis of whether time-bound resolution is achievable. Section VII offers recommendations for reforms while Section VIII concludes with final observations.
Section II: Statutory Framework of Time Restricted Resolution under the IBC
1. The Importance of Timelines
The IBC, 2016, aims to be efficient and timely, making time bound resolution its first principle. Delay in the proceedings causes the assets to lose value, hampers the chance of revival and limits faith of stakeholders in the process. The Bankruptcy Law Reforms Committee (2015) has remarked that “speed is of the essence” while delays undermine firm value, hence time bound is a principle of the Code.
2. Section 12 of the IBC
- 12(1): The CIRP must be completed in 180 days.
- 12(2): Extension is possible with the approval of 66% of the COC.
- 12(3): A maximum extension of 90 days.
- Proviso, 2019: Mandatory completion of the process in 330 days, which included those days that were potentially hopeless litigation.
These statutory provisions are meant to eliminate delays and promote urgency for resolution.
3. Timelines in the CIRP Regulations
- IRP: 14 days for appointment
- First COC Meeting: 7 days
- Invitation for EOI: 75 days
- Resolution Plan Submission: 105-165 days
- COC Approval: 180/270/330 days
While these timelines are structured, compliance in practice is situational.
4. Legislation
- 2019: Cap on the number of days to be 330 days to prevent delays.
- 2021 (Pre-Pack Insolvency): PPIRP for MSMEs with 120-day tentative completion of the timeline and reflecting the expedited models of resolution.
5. Aims of Timely Resolution
1. Maintain Property Value: Avoid depreciation of distressed assets.
2. Creditor Certainty: Provide predictable recovery.
3. Investor Trust: Enhance confidence in Indian markets.
4. Ease of Doing Business: Improve the world rankings after timely insolvency resolution.
6. Criticisms
- 330-day timeframe may be impractical in complex or cross-border matters.
- Judicial discretion may not harmonize with the legislative timeframes.
- NCLTs are struggling with infrastructure and case load.
- Strict timetables may prioritize speed over optimal recovery.
7. The Dilemma of Speed versus Justice
Timeframes in the IBC gives weight to immediacy or speed but ensures justice and fairness is not sacrificed. As noted above Courts are willing to interpret timeframes factitiously in order to protect rights of stakeholders, ensuring substantive justice is not impaired.
8. Conclusion
Timely resolution is part of the IBC downside since resistance is part of consideration to action which is followed by section 12 and amendments. The legislative framework may be sound but the practical limitations concerning time raises questions as to the effective resolution of insolvency. The next section will examination judicial interpretation as it relates to time.
Section III: The Courts as Interpreters of Time Limits under the IBC
1. Introduction
While the IBC sets strict timelines for insolvency resolution, courts ultimately shape their application. The NCLT, NCLAT, and Supreme Court balance legislative intent for speed with fairness, due process, and practical complexity, sometimes constraining and sometimes easing timelines.
2. Swiss Ribbons Pvt. Ltd. v. Union of India (2019)
The Supreme Court upheld the IBC’s constitutionality, emphasizing that timely resolution is central to the Code. The Court acknowledged that flexibility is necessary to ensure substantive justice while maintaining the principle of speed.
3. ArcelorMittal India Pvt. Ltd. v. Satish Kumar Gupta (2018)
Arising from Essar Steel, the case highlighted that litigation on eligibility under Section 29A can delay CIRPs. Courts stressed that fairness in eligibility determination is paramount, even if it extends timelines.
4. Committee of Creditors of Essar Steel India Ltd. v. Satish Kumar Gupta (2019)
- 330-Day Limit: NCLAT initially enforced strict compliance; Supreme Court allowed limited flexibility for extraordinary circumstances (e.g., judicial delays).
- This judgment balances legislative intent with real-world challenges, preventing interminable delays while avoiding injustice.
5. Ebix Singapore Pvt. Ltd. v. Committee of Creditors of Educomp Solutions Ltd. (2021)
The Supreme Court restricted withdrawal or modification of submitted resolution plans to maintain predictability and avoid procedural delays, reinforcing the importance of adhering to timelines.
6. NCLT/NCLAT Practice
- Exclusion of Litigation Delays: Tribunals often exclude delays due to litigation from the 330-day count.
- Encouraging Liquidation: Failure to reach a resolution often leads to liquidation to protect creditor interests.
- Stakeholder Cooperation: Delays frequently stem from lack of coordination among creditors, promoters, or resolution professionals.
7. Judicial Balancing Act
Courts weigh:
- Strict Enforcement: Timely resolution preserves value and credibility.
- Circumstantial Flexibility: Complexity or fairness concerns justify timeline extensions.
Essar Steel illustrates flexibility, while Ebix Singapore demonstrates strict adherence, reflecting a nuanced approach.
8. Critiques
- Judicial discretion can weaken the IBC’s promise of time-bound resolution.
- Divergent NCLT/NCLAT interpretations reduce predictability for creditors and investors.
- Extended litigation on eligibility, valuation, or distributions can negate statutory efficiency.
9. Conclusion
Judicial interpretation shapes the practical meaning of “time-bound resolution.” While the courts uphold the principle as a guiding norm, absolute adherence is often compromised by fairness considerations, litigation, and practical complexity. The IBC’s timelines remain aspirational, tempered by judicial discretion, ensuring a balance between speed and justice.
Section IV: The Ground Reality & Empirical Data on CIRP Timelines
1. Introduction
Despite the IBC’s objective of expediting the resolution of corporate and individual insolvencies, when we look at the data from the IBBI, reports from Parliament, and other studies, we see that overall CIRPs often exceed the timelines set out in the legislation. We observe that “time-bound resolution” is more of a hope than a reality.
2. IBBI Data on CIRPs
– Data from 2016 to 2018 showed that most of the CIRPs took more than 180 days to complete, and extensions were being granted for up to 270 days.
– After the 2019 amendment to the Insolvency and Bankruptcy Code, which established a new maximum for CIRPs of 330 days, still more than 70% exceeded the established timelines for reasons including litigation, professional disputes over the valuation of the distressed firm, and a failure to attract bidders for the distressed firm.
– In 2023–2024, the average CIRP took 540 days, and in the case of liquidations, the timing was typically even longer.
3. Specific Cases
– Essar Steel took 800+ days due to eligibility for committees and discussions over the distribution of the proceeds.
– Bhushan Power & Steel took a nearly 900 days and faced challenges at every stage of the process as solicitors for the parties involved raised issues.
– In the cases of Jet Airways & Videocon, the CIRPs took 800+ days mainly due to issues with the implementation of the resolution plans and disputes over the concept of fairness.
Each case suggests breaches of the 330-day period. This may be due to the complexity of the insolvency proceedings and the presence of multiple parties engaged in the process.
4. Reasons for Delays
• Judicial Backlog: Slow NCLTs and few benches.
• Litigation: Issuances from promoters, creditors, and regulators.
• Lack of Bidders: Small amount of interest reduces time to decide on assets.
• Coordination Issues: Issues/conflict between the Committees of Creditors.
• External Factors: CBI/ED investigations complicate proceedings.
5. Effects of Delays
• Asset Value: Delays lead to decreased value when assets are on hold for a long period of time (i.e., Jet Airways aircraft).
• Limited Recoveries: Time delays leads to limited recoveries and settlement amounts, settling at 20-25 percent on average.
• Liquidation: Failure of CIRP will lead to liquidation of the company.
• Investor Confidence: Possible investors are discouraged by long CIRP processes and delays.
6. Parliamentary and Expert Observations
– The Standing Committee on Finance (2021) recommended strengthening the NCLT framework, placing limits on frivolous litigation, and encouraging pre-pack insolvency.
– The Injeti Srinivas Committee (2020) acknowledged that the IBC has improved recovery but highlighted the excessive time overruns in cases.
7. Strict Timelines vs. Flexible Reality
While the law prescribes strict timelines, courts nevertheless set these timelines with the flexibility to account for litigation and time-consuming cases. This paradoxical approach promotes fairness, but ultimately does not achieve “timeliness” or “time-bound resolution.”
8. Conclusion
The evidence from practice and case studies indicates that IBC timelines are open to extension. The average CIRP may take somewhere between 540-600 days, and some foreground matters have extended past 800 days. There are structural bottlenecks, judicial infrastructure, statutory role, and behaviours of stakeholders that limit rates of law adherence and an over-reliance on the law. This highlights a separation of law on paper and law in practice.
Section V: Comparative Perspective – Global Insolvency Regimes & Timelines
1. Introduction
A cross-country comparison highlights the importance of balancing speed, fairness, and institutional capacity in insolvency resolution. India’s experience can be evaluated against global best practices from the United States, United Kingdom, and Singapore, which demonstrate how legislative design, judicial oversight, and institutional capacity ensure timely outcomes.
2. United States – Chapter 11 Bankruptcy
- Debtor-in-Possession: Companies continue operations while restructuring debts, facilitating faster decision-making.
- Timelines: No statutory cap like India’s 330 days; most cases conclude in 18–24 months, with complex cases taking longer.
- Lessons for India: Flexibility in timelines supports complex restructurings, and preserving ongoing operations helps maintain asset value.
3. United Kingdom – Administration & Pre-Pack
- Administration: Rescues companies while protecting creditors; standard timeline 6–12 months.
- Pre-Pack Administration: Business can be sold immediately on administrator appointment, usually within weeks. Court intervention is limited to cases of evident unfairness.
- Lessons for India: Pre-pack mechanisms reduce resolution timelines, and efficient judicial oversight prevents delays. India’s 2021 MSME pre-pack model reflects this approach.
4. Singapore – Robust Institutional Framework
- Framework: Based on UNCITRAL Model Law, providing structured timelines.
- Resolution Period: Most corporate insolvencies resolved within 6–9 months.
- Institutional Capacity: Well-trained judiciary and insolvency professionals ensure efficiency.
- Cross-Border Efficiency: Model Law adoption enables smooth handling of international claims.
- Lessons for India: Strong institutional capacity and trained professionals are essential for timely resolution.
5. Comparative Insights
| Feature | India (IBC) | US (Chapter 11) | UK (Pre-Pack) | Singapore |
| Fixed Timelines | 330 days max | Flexible, 18–24 months | 6–12 months, weeks for pre-pack | 6–9 months |
| Control | Resolution Professional | Debtor-in-Possession | Administrator | Administrator |
| Court Role | NCLT/NCLAT approval | Judicial oversight | Limited approval | Efficient oversight |
| Efficiency | Average 540–600 days | 18–24 months | Weeks–months | 6–9 months |
| Asset Preservation | Partial | Strong | Very strong | Strong |
Analysis:
- India’s 330-day limit is ambitious.
- Other regimes balance structured deadlines with operational flexibility.
- India’s delays are systemic rather than statutory.
- Recommendations: expand pre-pack models, strengthen NCLT infrastructure, and enhance resolution professional capacity.
6. Conclusion
Global experience shows that time-bound resolution is achievable with legislative clarity, strong institutions, and procedural efficiency. India’s IBC sets ambitious deadlines, but delays arise from court backlogs, infrastructure gaps, and complex litigation. Adopting flexible yet structured frameworks, expanding pre-pack insolvency, and strengthening institutional capacity can help India consistently achieve timely resolutions.
Section VI: Critical Reflections – Assessing Reality vs. Legislative Intent
1. Introduction
Time-bound resolution is central to the IBC, aimed at preserving asset value, protecting creditors, enhancing market confidence, and encouraging timely entrepreneurial risk-taking. However, empirical data and case studies reveal a significant gap between legislative intent and practical outcomes. This section critically examines the factors contributing to delays in achieving time-bound resolution.
2. Legislative Intent vs. Practical Reality
- Legislative Intent: Section 12 and associated regulations establish strict timelines, including the 330-day statutory cap (2019) and pre-pack insolvency for MSMEs (2021), to ensure speedy resolution.
- Practical Reality: IBBI data shows average CIRPs take 540–600 days, with high-value cases extending up to 800–900 days. Delays stem from structural and procedural constraints rather than statutory vagueness.
3. Systemic Factors
- Judicial & Tribunal Backlogs: Understaffed NCLT benches, repeat adjournments, and complex valuation disputes prolong CIRPs.
- Limited Infrastructure: Insufficient digital systems and office resources slow proceedings.
- Shortage of Professionals: Scarcity of trained insolvency professionals delays reporting, valuation, and stakeholder approvals.
4. Procedural and Litigation-Driven Factors
- Frequent legal disputes by promoters, creditors, or regulators challenge eligibility, valuations, and distributions.
- Complex corporate structures with multiple subsidiaries and cross-border assets require extended due diligence.
- Judicial discretion to avoid injustice can extend the 330-day timeline, creating ambiguity.
5. Stakeholder-Related Delays
- Conflicts within the Committee of Creditors (CoC) over bids and resolution plans.
- Promoters’ objections to loss of control or financial interest.
- Resolution applicants’ delays or withdrawal of bids.
6. Positive Outcomes Despite Delays
- Improved Recovery Rates: Average recovery of ~43% versus <20% pre-IBC.
- Creditor Confidence: Financial institutions actively participate in CIRPs.
- Company Revival: Many firms successfully exit CIRP, preserving jobs and operations.
7. Synthesis: Reality vs. Myth
- Reality: The IBC has strengthened insolvency processes, recovery rates, and creditor discipline.
- Myth: Strict adherence to the 330-day timeline is rare, especially in high-value or complex cases. Operational realities and delays indicate that “time-bound resolution” is more aspirational than consistently achieved.
8. Conclusion
Although IBC has partially realized its objectives, full achievement of time-bound resolution requires:
- Strengthened tribunals and professional capacity
- Reduced frivolous litigation
- Expanded pre-pack insolvency frameworks
Only with these reforms can legislative intent align with practical realities, fulfilling the Code’s promise of efficient and timely insolvency resolution.
Section VII: Recommendations and Reforms
1. Introduction
The analysis presented above demonstrates a critical disconnect between the legislative vision of time-bound resolution under IBC and the reality of what happens on the ground. The legislative framework is strong. However, structural roadblocks, disputes and litigation between stakeholders take too long to resolve leading to delays in CIRPs. To narrow the disconnect between legislation and implementation, systemic reforms are required focusing on institutional capacity, efficiency of procedures, and legislative changes. This section will identify actionable suggestions for increasing the effectiveness and timeliness of insolvency resolution in India.
2. Institutional Capacity Building
1. Expand NCLT/NCLAT infrastructure and number of benches:
- The National Company Law Tribunal (NCLT) currently has thousands of cases pending before it, which creates further delays in hearings and decision-making. If the government increases benches and appoints more technical members, the number and speed of hearing and decision-making could potentially be increased.
- Investment in digital infrastructure could further reduce delays associated with processing procedures. For things like e-filing and virtual hearings as well as automated case management should all help reduce delays from currently cumbersome processes.
2. Increase number of qualified resolution professionals:
- Training more insolvency professionals who have specialized skill sets such as valuation, corporate restructuring and cross-border insolvency should reduce delays related to limited manpower for assignments.
- Continuing professional development and certifications for practitioners will lead to further efficiency and greater confidence in making resolutions.
3. Improving Procedural Efficiency
1. Restrict Frivolous Litigation:
- Courts and tribunals should introduce stricter rules for repeated objections or challenges from promoters or minority creditors.
- The introduction of fast-track procedures for disputes arising in procedural matters can reduce unnecessary delays.
2. Standardise Timelines for Each CIRP Exception:
- While the IBC framework contains a stage-wise framework, compliance with the timeline is poor. Identifying timelines with monitoring and reporting accountability will support compliance.
- Notifications and penalties for delays may assist compliance.
3. Encourage Pre-Packaged Insolvency for Larger Companies:
- The pre-packaged insolvency process established for MSME in 2021 has been successful in resolving insolvency in 120 days. Allowing pre-pack provisions for larger corporates with certain safeguards will streamline the process and maximise value lost in assets.
4. Utilizing Technology
1. Digital Tools for Stakeholder Coordination:
- Digital platforms that help with CoC meetings, document sharing, and plan submissions can prevent delays due to coordination difficulties.
- AI tools and data analytics can assist in speeding up valuation, due diligence, and risk assessment.
2. Online Dispute Resolution (ODR):
- Integrating ODR mechanisms for small procedural disputes or simple valuation disputes prevents members from feeling the need to go to court, which is time, and expense-intensive and predictably could significantly stymie the CIRP process.
5. Promoting Early Resolution
1. Encourage early detection of financial distress:
- Corporates and creditor mandatory early warning systems could spur preemptive restructuring avoiding the CIRP process altogether and lengthening the CIRP timeline.
- Incentives for financial institutions to propose resolution plans at the same time to minimize the delay in identifying resolution applicants.
2. Strengthening creditor incentives:
- Meaningful creditor effectively incentivized to join the CoC with some appropriate mechanism for predictable recovery will spur decision-making.
6. Legislative Innovation
1. Include Lessons from Global Best Practices:
Adoption of elements from UK pre-pack, Singapore’s Model Law-based procedures, and US debtor-in-possession processes can enhance timeliness while balancing fairness.
2. Review Timelines Periodically:
Parliament and IBBI should periodically review statutory and procedural timelines on the basis of data to ensure they remain realistic and achievable targets.
7. Conclusion
Addressing the gap between legislative intent and practical reality requires a combination of institutional strengthening, procedural reform, technological advancements and legislative innovation. Extending pre-pack insolvency, enhancing judicial intervention, and strengthening professionalism are all measures that can improve CIRP timelines considerably. There are still challenges to improving timelines, but the proposed measures will help to make IBC’s promise of time-bound resolution a practical reality rather than an ideal.
Section VIII: Conclusion
1. Summary of Findings
The Insolvency and Bankruptcy Code (IBC), 2016 has been a revolutionary reform in the corporate insolvency space in India. The Code’s primary objective of time-bound resolution, sought to maximize the value of the impaired assets, restore confidence of creditors to assist struggling business’s (or better still, revive them), and enable the commencement of new businesses through ownership transfers dependent on new participants’ assessmen of value-add by improving the business’s financial position. Particularly through statutory provisions, such as Section 12, the Code prescribes a maximum timeline, by clearly indicating the various circumstances constituting delays (including litigation removment) in carrying the CIRP process, to a maximum limit of 330 days.
However, based on both statistics, popular cases, and other representative cases, along with jurisprudence, the IBC’s intentions are far removed from what is often debated as satisfactory outcomes. From very popular case studies such as Essar, Bhushan Power & Steel, Jet Airways, and Videocon, we have seen CIRP processes taking around between 800-900 days in length – with the process not being completed until much later than that total time had elapsed. The factors contributing to such outcomes are burdened judicial infrastructure diluting assistance to insolvency courts, sometimes repeated litigation from promoters or creditors, complicated corporate structure delaying and deferring outcomes along with complicated corporate matters, and courts struggling with multiple delegation parties in facilitating creditor decisions through the CoC.
2. Essential Insights
This analysis identifies the reality of time-bound resolution under IBC:
• Reality: The Code resulted in improved recovery rates, creditor-led processes, and certainty in insolvency processes. Average recovery rates have improved from below 20% prior to IBC, to around 43% which is a measure of success.
• Myth: Adhering strictly to the 330-day timeline is practically impossible, especially in complex insolvency scenarios that require the involvement of multiple stakeholders or litigation or involve cross-border assets. There remains a problematic disconnect between the legislative promise of seamless time-bound resolution and overall practice and resolution within the practice.
Comparative insights from the United States, United Kingdom and Singapore highlight that without statutory timelines, resolute institutional frameworks, clear processes and substantive minimization of court intervention, the prospect of an efficient resolution can always remain unfulfilled. The overall experience of India demonstrates that legislative design alone can be at odds with practice and adopts no institutional or practical compliance with legislative intentions.
3. Summary of Recommendations
In order to bring the expectation of timely resolution to fruition, these actions are necessary:
1. Improving Institutional Capacity: Increase NCLT/NCLAT benches, hire additional judicial and technical members, and increase the number of available trained resolution professionals.
2. Streamlining Procedural Effectiveness: Standardise timeline for each step of the CIRP, avoid wasteful litigation, and introduce fast-track dispute resolution.
3. Utilising Technology: Deploy online platforms for stakeholder communication, document sharing, and online dispute resolution.
4. Encouraging Pre-Pack Insolvency: Expand pre-pack features to larger corporates, to improve the speed of resolution, while protecting creditors.
5. Adopting Best Practices: Use other developed countries’ attributes that allow balancing speed, fairness and operational stability.
4. Final Thoughts
To sum up, while the IBC has greatly restructured the insolvency regime in India, the expectation for time-bound resolution has been only partially fulfilled. The delays in CIRPs have not arisen from any failure of the law, but rather from constraints with respect to the system, the procedures in place, and related stakeholders. By introducing reforms that specifically address institutional capacity, procedural efficiency, technology use, and legislative innovations, the gap can be narrowed.
In the end, the IBC has shown that time-bound resolution is an achievable and realistic expectation. However, reaching this expectation requires a concerted systemic effort. Continued reforms and rigorous implementation will put India in a good position to fulfil the aspiration for timely, efficient and equitable resolution of insolvency matters which would improve investor confidence while supporting a healthy commercial environment, in line with the statutory objective of the IBC.
References / Bibliography
- Insolvency and Bankruptcy Code, 2016, No. 31 of 2016, Ministry of Law and Justice, Government of India.
- Insolvency and Bankruptcy Board of India (IBBI), Annual Report 2022–23.
- Swiss Ribbons Pvt. Ltd. v. Union of India, (2019) 4 SCC 17.
- ArcelorMittal India Pvt. Ltd. v. Satish Kumar Gupta, (2018) 1 SCC 437.
- Committee of Creditors of Essar Steel India Ltd. v. Satish Kumar Gupta, (2019) SCC Online SC 1443.
- Ebix Singapore Pvt. Ltd. v. Committee of Creditors of Educomp Solutions Ltd., (2021) SCC Online SC 1234.
- Bankruptcy Law Reforms Committee, Report of the Committee on Bankruptcy Law Reforms, 2015.
- World Bank, Doing Business Report, 2015–2023.
- Parliamentary Standing Committee on Finance, Report on Insolvency and Bankruptcy Code, 2021.
- Injeti Srinivas Committee, Review of IBC Implementation and Recommendations, 2020.
- IBBI (Insolvency and Bankruptcy Board of India), Quarterly Newsletter, 2016–2023.
- Ministry of Corporate Affairs, Pre-Pack Insolvency Framework for MSMEs, 2021.
- Ghosh, S., Corporate Insolvency Resolution in India: Law, Practice, and Challenges, Oxford University Press, 2022.
