Report on Bankruptcy Law Reforms

The state of bankruptcy law in
India continues to leave much to be desired, and adds to the difficulties in
doing business in the country. Several previous efforts have been undertaken
towards reforms, but they have either been introduced on a piecemeal basis or
have not entirely been successful.
With this in mind, the Government
had last year appointed the Bankruptcy Law Reform Committee (BLRC) to review
the framework for corporate bankruptcy in India. The BLRC has issued its Interim Report, which is now
available on the Ministry of Finance website. The report adopts a two-stage
approach. The first stage involves an examination of the present legal
framework and suggestion of immediate reforms. The BLRC has sought to
accomplish this through the Interim Report just issued. The second stage (to be
undertaken next) would be to develop an “Insolvency Code” that would encompass
all aspects of personal and business insolvency.
The Interim Report makes a number
of suggestions to alter the Companies Act, 2013 and also in relation to the
National Company Law Tribunal (NCLT), which continues to be mired in
litigation. A quick glance at the report indicates that it is detailed and the
result of meticulous work supported by in-depth research. A closer study is
required to make more substantive assessment of the recommendations.
The Ministry of Finance has sought
comments, suggestions or recommendations by February 20, 2015. One quibble is
that the time provided is woefully inadequate to respond to significant
proposals made in a detailed report.

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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