20 May 2016
Insolvency Debt Recovery Period in India Slashed from Four Years to 180 Days
INDIA – Creditors will be able to recover debts from insolvent companies in just 180 days, rather than over the four years the process currently takes. This drastic reduction in the debt recovery period is the key element in the country’s newly enacted Insolvency and Bankruptcy Code.
Aside from stipulating this maximum 180 day period (with a one-off 90 day extension at the liquidators’ discretion), the Code also legislates for the creation of registered insolvency professionals. These individuals will be charged with working with ailing businesses and banks to manage the liquidation process. In additional moves, a new overall insolvency regulatory body will be created, while the official collection and management of debt-related data will be enhanced.
India is currently 136th in the World Bank’s speed of insolvency resolution league. China, where such proceedings typically take around 1.7 years, is ranked at number 55.