The idea behind IBC is to resolve corporate insolvency quickly so that capital can be freed for productive use. Legacy methods were found wanting, and the code has been modified swiftly to overcome gaps. Special dispensation has been provided, or is in the works, for financial service providers, small enterprises and real estate companies. Yet, bankruptcy resolution is taking longer and yielding less to creditors.
It would be unfair to compare IBC with older debt recovery mechanisms. The purpose envisioned is to keep corporate debtors in business even after a default. But the number of cases admitted for insolvency resolution that end up in liquidation is distressingly high. This pulls down the recovery value to levels of legacy debt reco…
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