“Revival of Sick Companies in India not only benefits the company but assists in achieving High Gross Domestic Product, generate employment and ultimately economy grows at a reasonably faster pace.” said Justice A.K Sikri while addressing the august gathering in a conference on Insolvency and Bankruptcy Code 2016, A Game Changer organized by BRICS Chamber of Commerce and Industry with Achromic Point Consulting Pvt. Ltd. in India Habitat Center, New Delhi. It is in the better interest of Indian economy to look for all possible options to revive troubled companies, he added.
“Foreign Companies invest in India to get good returns out of the principal amount spent on setting up production units. In order to attract FDI, friendly business environment is mandatory and cumbersome process of getting numerous approvals make us loose foreign investors. The aim of increasing the FDI inflow and entering into a venture foreign company’s look into pros and cons” Said Justice Sikri. He opined external factors can make any company go sick. Steel Industry, for instance in India started facing trouble because of external factors and competitive low rates offered by China to the world market. Similarly, realty sector witnessed boom in previous years but mismanagement of company directors made it suffer a lot.
Change of management in a sick/troubled company is a significant provision in Insolvency and Bankruptcy Code 2016, he added. Balanced and fair negotiations between the debtor and creditor and amending law in favour of home buyers, time limit with in which resolution has to be done makes it unique unlike other acts passed and creditors and stakeholders interest is considered.
Justice Sikri also highlighted the importance of interplay of Law and Economics for successful implementation of the new Insolvency Code. Implementing the Law in true spirit by keeping in mind, the economics of the business will lead to achieving the desired objectives of the new Insolvency Code. The Past President of INSOL India, Justice Sikri segregated the sickness in three categories – (i) Born Sick; (ii) Genuinely Acquired Sickness and (iii) Malafide Deliberate Stress. Justice Sikri highlighted that the entities falling in the second category of stress must be protected and rehabilitated.
Chief Guest Justice S.J Mukhopadhyay, Chairperson National Company Law Appellate Tribunal in the inaugural session made an observation that if home buyers are keen on getting the home they applied for, then they should not be considered as “creditors” but will continue to be considered as “consumers.” However, if the home buyers have sought cancellation of the unit they applied for and are keen on getting the refund, then they would fall in the category of “creditors” and not the “consumers”.
Justice Mukhopadhyay also made an observation that the Code is silent on the aspect whether the powers which have not been vested to the IRP/ RP, would continue to be exercised by the Directors whose powers are suspended.
Dr. B.B.L Madhukar, Secretary General of BRICS Chamber of Commerce & Industry mentioned further simplification of the code would be commendable and this would indeed prove to be a game changer for Indian economy.
Mr. Amarjit Singh Chandhiok, President INSOL- India, Former Additional Solicitor General of India, Principal Counsel, State & Judicial Affairs, EU commission in his keynote address said many positive changes have been observed during last 8-9 months and suggested to introduce ‘Residuary Creditors’ on sidelines of ‘Financial Creditors’ and ‘Operational Creditors’. “Individual Bankruptcy and Defaulters can be dealt by Subordinate/Individual Judges to make the process fast instead of the DRT which has already been recommended by INSOL India to the Ministry.
Mr. N.P.S Chawla, Associate Partner, Vaish Associates Advocates who were knowledge partner in the conference in his address said robust infrastructure and mechanism and proper implementation of the Insolvency & Bankruptcy Code is need of the hour. Out of 3800 applications filed under the code, so far, only 370 have been admitted which is less than 10 per cent of the total application filed.
Mr. Satwinder Singh, Partner, Vaish Associates Advocates; Mr. Sajeve Deora Director – Integrated Capital services; Mr. P.S Rawat, Ex- Executive Director Canara Bank and Mr. C.S Harish K. Vaid Vice President & Company Secretary, Jaypee Infratech Ltd. were also present and enlightened the public on this topical issue.