IBC and the ‘de-stressing’ of India Inc
Key law: The IBC is a one-stop solution for resolving insolvencies×
Thanks to the bankruptcy code, distressed firms are able to better access short- and long-term debt funds
The Covid-19 pandemic has been driving corporate failures around the world, including in India. In the absence of the much-needed institutional arrangements in many developing countries, following default, a given firm’s management, capital and labour would come to a standstill, pushing it into liquidation.
A sound bankruptcy process can rapidly resolve such a default scenario resulting in more entrepreneurship, greater risk taking, and better access to debt markets. Amid lockdowns and economic shutdowns, we evaluate India’s bankruptcy law in terms of its effectiveness for financially distressed firms.