The state of bankruptcy law in India continues to leave much to be desired, and adds to the difficulties in doing business in the country. Several previous efforts have been undertaken towards reforms, but they have either been introduced on a piecemeal basis or have not entirely been successful.
With this in mind, the Government had last year appointed the Bankruptcy Law Reform Committee (BLRC) to review the framework for corporate bankruptcy in India. The BLRC has issued its Interim Report, which is now available on the Ministry of Finance website. The report adopts a two-stage approach. The first stage involves an examination of the present legal framework and suggestion of immediate reforms. The BLRC has sought to accomplish this through the Interim Report just issued. The second stage (to be undertaken next) would be to develop an “Insolvency Code” that would encompass all aspects of personal and business insolvency.
The Interim Report makes a number of suggestions to alter the Companies Act, 2013 and also in relation to the National Company Law Tribunal (NCLT), which continues to be mired in litigation. A quick glance at the report indicates that it is detailed and the result of meticulous work supported by in-depth research. A closer study is required to make more substantive assessment of the recommendations.
The Ministry of Finance has sought comments, suggestions or recommendations by February 20, 2015. One quibble is that the time provided is woefully inadequate to respond to significant proposals made in a detailed report.