Paper on Corporate Insolvency Laws in India

Professor Kristin van Zwieten
has posted on SSRN a new paper titled “Corporate
Rescue in India: The Influence of the Courts
”, the abstract of which is as
is poised for significant reform to its corporate insolvency laws, including
the introduction of a new rescue procedure. The reforms follow two decades of
sustained criticism of the law, critics complaining of lengthy delays and a
range of related costs in the disposal of proceedings. This article focuses on
the most notorious of India’s existing insolvency procedures, a corporate
rescue procedure established under the Sick Industrial Companies (Special
Provisions) Act 1985. On the eve of its repeal, the article presents the
results of an investigation into how this Act operated over time, and why. Its
central contribution is to report new evidence of the influence of the courts
on the operation of the Act. The article reveals how key provisions of the Act
were interpreted and reinterpreted by judges in attempts to rescue companies
destined for liquidation, and to protect some of their stakeholders (especially
employees) in the interim. The evidence of these innovations offers a new and
compelling explanation for why the rescue procedure became slow and costly.
Acknowledging and understanding the influence of the courts on the operation of
this procedure may help to guard against India’s new corporate rescue procedure
suffering a similar fate.

About the author

Umakanth Varottil

Umakanth Varottil is an Associate Professor at the Faculty of Law, National University of Singapore. He specializes in corporate law and governance, mergers and acquisitions and cross-border investments. Prior to his foray into academia, Umakanth was a partner at a pre-eminent law firm in India.

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