The Insolvency and Bankruptcy Code (IBC), which turned two this month, remains a work in progress despite creditors getting record recoveries and a rise of never-before opportunities to exit and buy businesses in India.
To explain IBC’s birth, Insolvency and Bankruptcy Board of India (IBBI) Chairperson M.S. Sahoo last week recalled a dialogue in a novel by Ernest Hemingway — ‘How did you go bankrupt?’ and the response is ‘Gradually and then suddenly’.
This was to illustrate the fact that the insolvency reform was in the works since 1992 but was suddenly made operational from December 1, 2016 with no prior experience of a regime that should be proactive, incentive-compliant, market-led and time-bound.
While the insolvency reform was ‘gradual and then sudden’, IBC, which in Finance Minister Arun Jaitley’s words was hurriedly put in place due to necessity because every other solution had effectively failed, will achieve its objective gradually.
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