India's IBC faces low recovery rates and delays

The Insolvency and Bankruptcy Code (IBC) in India is facing challenges with low recovery rates. Issues include inadequate judicial infrastructure at the National Company Law Tribunal (NCLT) and slow resolution processes. It often takes well over 800 days to resolve cases, much longer than the original 270-day target. To improve these recovery rates, experts suggest several changes. First, they propose appointing Additional Insolvency Professionals (AIPs) to focus on compliance. This would allow the main Insolvency Professionals (IPs) to concentrate on maximizing value for the struggling companies. The selection process for IPs should also consider their industry expertise, not just the number of cases they have managed. Another suggestion is to require safety assessments for companies undergoing insolvency. Many distressed businesses have deferred maintenance, risking safety and asset value. Empowering IPs to manage safety improvements could prevent accidents and enhance asset valuations. Experts also recommend that Financial Creditors (FCs) manage opinions on certain types of transactions instead of relying on the IP's input, which often lacks legal weight. This change would give FCs a more active role and enable IPs to focus on creating value for the company. Additionally, there should be a written explanation for any changes in IPs or Insolvency Professional Entities (IPEs) to ensure transparency. Finally, steps must be taken to identify and avoid conflicts of interest in IPE appointments. These reforms could greatly improve outcomes for all parties involved in the IBC process.