Debt Restructuring Through Scheme of Arrangement

I have posted
a working paper titled “The Scheme
of Arrangement as a Debt Restructuring Tool in India: Problems and Prospects

on SSRN, the abstract of which is as follows:
The goal of
this paper is to analyse the scheme of arrangement as a debt restructuring tool
in India and the extent to which it has been utilised. It finds that the scheme
has been used sparingly for debt restructuring in India, and primarily in large
and complex transactions. This is contrary to jurisdictions such as the United
Kingdom and Singapore that have witnessed a rise in the use of this mechanism.
This trend clearly indicates that the presence of an efficient restructuring
mechanism in the legal rules is by itself inadequate to ensure its full
utilisation. Apart from law on the statute books, necessary regard must be had
to other legal and institutional considerations as well as a complex web of
other factors, including historical and business considerations, which
ultimately determine the success (or failure) of a mechanism such as the scheme
of arrangement in each jurisdiction. In India, the scheme has been overshadowed
by other mechanisms (both informal and formal), and that wide-ranging reforms to
the law relating to corporate resolution have paid short shrift to the scheme.
The paper concludes with some recommendations to rejuvenate the use of schemes
in India to exploit its full potential as an effective tool for debt

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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