<p><em>By Nic Querolo and Saikat Das</em></p><p>The Indian government is considering changes to its bankruptcy laws, including streamlining court processes, amid growing concerns over lengthy proceedings and low recovery rates.</p><p>The Insolvency and Bankruptcy Board of India is finalizing a set of proposals aimed at speeding up resolution. Public consultation is set to end Tuesday, though the deadline may be extended.</p><p>Global investors have long been cautious about lending in India, where insolvency cases can often run for years with poor recoveries. While Prime Minister <a href="https://www.deccanherald.com/tags/narendra-modi">Narendra Modi</a>’s administration revamped bankruptcy laws about a decade ago, mandating resolutions within 330 days, cases routinely exceed that limit. The delay erodes asset values as well as recovery rates for lenders.</p><p>“The time overruns in insolvency cases followed by the decline in recovery outcomes have been a cause of concern for all stakeholders,” said Hari Hara Mishra, chief executive officer of the Association of ARCs in India, a group that represents bad loan managers.</p>.India plans more airfare oversight as Kumbh Mela costs stoke ire.<p>In nine months through December, it took 821 days on average for the courts to approve a resolution plan. That’s 35 per cent longer than in the fiscal year ended March 2023, according to IBBI data. Liquidation orders took 655 days on average in the nine months through December. Meanwhile, investors on average recovered about 28 per cent during the financial year ended March 2024, down from 46 per cent in 2018-2019, data from the Reserve Bank of India (RBI) show.</p><p>The new proposals aim to improve efficiency, including changes that would allow courts to manage insolvencies of complex, interconnected businesses via joint hearings rather than as standalone units.</p><p>Other measures seek to resolve creditor disputes without delaying a company’s progress toward a resolution plan, and encourage interim financing that would allow lenders to participate in creditor meetings as observers.</p><p>The improvements could benefit India’s bad debt managers, known as asset reconstruction companies, who buy non-performing loans from traditional lenders. </p><p>“Interim financiers help retain asset value in an insolvency case,” said Puneet Jain, chief investment officer at Neo Asset Management, a money manager who oversees over $3 billion. “If they gain more clout in the corporate insolvency process it will pave the way for private credit funds to do more business in special situations.”</p>
<p><em>By Nic Querolo and Saikat Das</em></p><p>The Indian government is considering changes to its bankruptcy laws, including streamlining court processes, amid growing concerns over lengthy proceedings and low recovery rates.</p><p>The Insolvency and Bankruptcy Board of India is finalizing a set of proposals aimed at speeding up resolution. Public consultation is set to end Tuesday, though the deadline may be extended.</p><p>Global investors have long been cautious about lending in India, where insolvency cases can often run for years with poor recoveries. While Prime Minister <a href="https://www.deccanherald.com/tags/narendra-modi">Narendra Modi</a>’s administration revamped bankruptcy laws about a decade ago, mandating resolutions within 330 days, cases routinely exceed that limit. The delay erodes asset values as well as recovery rates for lenders.</p><p>“The time overruns in insolvency cases followed by the decline in recovery outcomes have been a cause of concern for all stakeholders,” said Hari Hara Mishra, chief executive officer of the Association of ARCs in India, a group that represents bad loan managers.</p>.India plans more airfare oversight as Kumbh Mela costs stoke ire.<p>In nine months through December, it took 821 days on average for the courts to approve a resolution plan. That’s 35 per cent longer than in the fiscal year ended March 2023, according to IBBI data. Liquidation orders took 655 days on average in the nine months through December. Meanwhile, investors on average recovered about 28 per cent during the financial year ended March 2024, down from 46 per cent in 2018-2019, data from the Reserve Bank of India (RBI) show.</p><p>The new proposals aim to improve efficiency, including changes that would allow courts to manage insolvencies of complex, interconnected businesses via joint hearings rather than as standalone units.</p><p>Other measures seek to resolve creditor disputes without delaying a company’s progress toward a resolution plan, and encourage interim financing that would allow lenders to participate in creditor meetings as observers.</p><p>The improvements could benefit India’s bad debt managers, known as asset reconstruction companies, who buy non-performing loans from traditional lenders. </p><p>“Interim financiers help retain asset value in an insolvency case,” said Puneet Jain, chief investment officer at Neo Asset Management, a money manager who oversees over $3 billion. “If they gain more clout in the corporate insolvency process it will pave the way for private credit funds to do more business in special situations.”</p>
