IBC faces hurdles in delays, recoveries and ethical standards: IBBI chief

The Insolvency and Bankruptcy Code (IBC) is encountering persistent obstacles that threaten to undermine its effectiveness as a debt resolution mechanism, according to officials steering the regulatory framework.

Jayanti Prasad, chairperson of the Insolvency and Bankruptcy Board of India (IBBI), highlighted three critical areas of concern: delays in resolution proceedings, challenges in asset recovery and ethical compliance across the insolvency ecosystem. These issues, Prasad indicated, require immediate attention to strengthen the creditor protection framework and improve outcomes for stakeholders.

Adding to the operational challenges, Anupinder Singh Grewal, president of the National Company Law Tribunal (NCLT)—the judicial body adjudicating insolvency cases—flagged significant staffing vacancies within the tribunal. Grewal also suggested raising the filing threshold for insolvency petitions to reduce the volume of cases and allow the system to process existing matters more efficiently.

The NCLT's capacity constraints and IBBI's concern over recovery realisation rates underscore growing pressure on India's insolvency framework as corporate defaults continue across sectors. Officials' remarks suggest that regulatory and institutional reforms may be necessary to enhance the system's speed and effectiveness in resolving corporate failures.