In times of acute financial distress, such as these, one might expect to see bankruptcy practitioners and scholars to be the busiest. Bankruptcy law is often used as a tool to mitigate and deal with the impact of financial distress. As financially distressed firms and creditors seek the refuge of the law for debt recovery and re-organisation, one is likely to see an uptick in bankruptcy cases and new jurisprudence.
In India, this is not the case. On 5 June 2020, the President promulgated the Insolvency and Bankruptcy Code (Amendment) Ordinance, 2020 (Suspension Ordinance). The Suspension Ordinance suspended the operation of the Insolvency and Bankruptcy Code, 2016 (IBC) in its entirety in respect of Covid-related defaults. Simply put, defaults committed in the period between 25 March 2020 and 24 September 2020 cannot be used to trigger bankruptcy under the IBC ever. This is unlike other jurisdictions which have either kept the law intact or suspended parts of it, such as the debtor’s duty to file for bankruptcy or creditors’ rights to trigger bankruptcy.
This gives bankruptcy scholars the opportunity to sit back and think about the evolution of the IBC over the last four and a half years. It allows practitioners to detach themselves from their hectic day-to-day bankruptcy practice and negotiations, introspect the overall trajectory of the law and identify whether the implementation of the law meets their expectations of it. It gives the judges of the National Company Law Tribunal the bandwidth to clear the case backlog that might have accumulated. Data published by the Insolvency and Bankruptcy Board of India shows that, for the quarter ended June 2020, 2108 insolvency cases have been admitted and are at some stage of the insolvency life-cycle.
I used this time to record some podcasts on different aspects of the IBC. The conversations do not dwell on any specific provision or case-law or the interpretation of the IBC. Rather, the attempt is to take a larger perspective of the working of the IBC and its fall-outs, especially during this period. The podcasts are linked below:
- A conversation with Sandesh Athyam on information utilities, a lesser spoken about concept under the IBC. We talk about the use-cases of information utilities and the case for their regulation (or de-regulation). Available here on the Legal Synthesis podcast.
- A conversation with Srinath Raghavan on bankruptcy law and debt moratoriums. We discuss the tools used by Indian policymakers to deal with financial distress in the wake of the pandemic and what they have done differently to help people deal with Covid-related financial distress. Available here on the Interpreting India podcast.
- A conversation with Adam Feibelman, Renuka Sane and Rahul Shrivastava on comparing the bankruptcy law in the United States and the IBC. Available here on A Law in Common: India and the United States podcast.