The Insolvency and Bankruptcy Code, 2016, is an epochal legislation to bring a paradigm shift in the manner of resolution of stressed companies that were unable to pay off their debts. However, of late, numerous criticisms have surfaced that the IBC is facilitating high haircuts (lesser recovery than admitted claims) to the lenders, which is causing substantial losses of public monies. For instance, prominent financial journalist Sucheta Dalal, in her recent article in a leading blog, has criticised what she terms ridiculous haircuts being accepted by the lenders under the IBC.
The criticism of the IBC also seems to be fuelled by the fact that under it, the lenders have on average realised only around 40% of their total admitted claim …
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