The government is planning to roll-out few changes in Insolvency and Bankruptcy Code (IBC) which is a well-established law to resolve insolvency proceedings matters in India. As our country is moving towards more and more globalization with each passing year, so does issues and disputes with respect to payments also keep increasing. So in order to make this international dispute resolution between creditor of one country and debtor of another country, the new regulations will be rolled out.
“Out of Court Settlement” in layman language means resolution of dispute without Court’s interference. The government is focusing on this part so that speedy resolution can be done and Courts are not overburdened. At present, IBC does not have a proper framework for out-of-court settlements, because of which, negotiation between domestic and international parties has become very challenging. Hence, the changes would introduce the steps, documentation and approvals required in order to manage and execute such settlements easier.
One of the notable case which has led government to think about such changes is that of Jet Airways. In this case, creditors filed application against corporate debtor both in Netherlands and in India. As a result, the NCLT Mumbai bench first declared proceedings in Netherlands Court as void but later on allowed joint Corporate Insolvency Resolution Process (CIRP).
The new regulations are expected to decrease the time limit for resolution from existing 330 days’ timeline to 165 days timeline.
The changes that will be introduced are to be thoroughly reviewed, particularly because India is a party to various International Bilateral and Multilateral Agreements.
Insightful
Thankyou Sir.