The Insolvency and Bankruptcy Board plans to fast-track the resolution process for “smaller cases”, including for startups, and complete them within 90 days. (Source: Reuters)

The Insolvency and Bankruptcy Board plans to fast-track the resolution process for “smaller cases”, including for startups, and complete them within 90 days. The Board has been set up under the Insolvency and Bankruptcy Code, which came into force from December 1, 2016. While a final decision is yet to be taken, the Insolvency and Bankruptcy Board of India (IBBI) is looking at the possibility of fast-tracking resolution process for smaller cases and those having less complications.

An idea is being discussed wherein smaller cases could have slightly different procedures in terms of insolvency resolution. There could be differential treatment in terms of time, IBBI Chairman M S Sahoo said. “Fast-track is a process which has to close in 90 days and these are likely to be applied to cases with less complications… The example could be startups,” he told PTI.

The Code provides for completing insolvency resolution process within 180 days and the time-frame starts from the insolvency commencement date. Now, the idea of bringing it down to 90 days for smaller cases is being looked into. The Code seeks to consolidate and amend laws relating to reorganisation as well as insolvency resolution of corporate persons, partnership firms and individuals in a time-bound manner.

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Presently, at least 35 corporate insolvency resolution transactions are going on. Among various provisions, the Code provides penal powers to the IBBI in case an insolvency process has been triggered in a fraudulent manner. For such matters, there would be penalties by the IBBI as well as the National Company Law Tribunal (NCLT) depending on which entity has done a fraudulent act. “Penalties (will be there) from IBBI and also from the NCLT depending on who has done (fraud)…,” Sahoo said.