The insolvency regulator has set up a working group under former Securities and Exchange Board of India (Sebi) Chairman UK Sinha to recommend a complete regulatory framework to facilitate insolvency resolution and liquidation of debtors in a corporate group within the Insolvency and Bankruptcy Code (IBC).
At present, the IBC provides for the resolution or liquidation of only individually- stressed companies. So a framework within the IBC is sought to be created for the resolution/liquidation of an entire stressed corporate group having several entities in multiple NCLT jurisdictions, sources said.
The working group, with seven members and four invitees, will submit its report in two months, the Insolvency and Bankruptcy Board of India (IBBI) said in a statement.
The two-year-old IBC has been the best mechanism to recover debt thus far. An ongoing RBI report proposed that the average recovery by banks, due to IBC recording, was as much as 41.3 per cent in FY18, against a merely 12.4 per cent through different mechanisms, for example, the SARFAESI Act, Debt Recovery Tribunals and Lok Adalats.
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