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Bharat’s insolvency and arbitration laws evolving

Bharat’s laws relating to insolvency and arbitration are in sync with global practices, but are not a “cure for all problems” and would undergo reform over time to keep pace with the needs of the economy, says Vivek Sood, a Senior Advocate of the Supreme Court who has authored the first comprehensive book on the two statutes.

Indicative of the movement ahead are the recent amendments in the Insolvency and Bankruptcy Board of India Regulations which “are in the right direction as they strengthen the CIRP (Corporate Insolvency Resolution Process),” Sood, the author of “Emergence Of Commercial Justice – Insolvency And Arbitration” (Bloomsbury), told IANS in an interview.

The amendments “should pave the way for corporate India into the future”, Sood said, adding: “Of course, many other areas need reform too” and the Insolvency and Bankruptcy Code and the Arbitration and Conciliation Act “are not a cure for all problems”.

“Free play in the joints ought to be given to the legislature and the executive while making economic laws and regulations. Economic regulations are an ever-evolving process that must keep pace with the needs of the economy,” Sood noted.

Elaborating on the benefits of the amendments, he said the duty imposed on the IP (Insolvency Professional) to find the changing names and registered offices of corporate debtors “is in public interest”.

This is because stakeholders “may not be able to track the changing names and registered offices of corporate debtors and hence may not be able to participate in the CIRP. In order to plug this problem, the IP has been enjoined upon to track the changing names and registered offices of corporate debtors so that all stakeholders such as homebuyers and others can be parties to the CIRP”.

Also, the amendments empower the IP to engage professionals for valuation of the assets, etc. of the corporate debtors. Valuation is a specialised field where professionals ought to be engaged and the IPs cannot be expected to delve into valuation exercises, Sood explained.

“This amendment would go a long way to professionalise the process of valuation of corporate debtors. Finding murky transactions of corporate debtors such as under invoicing, under valuation, and other fraudulent transactions will henceforth be the duty of the IP and place the same before the NCLT for appropriate reliefs.

“It’s a significant step forward in public interest especially in the interests of creditors and resolution applicants who wish to stake their claims to take-over the corporate debtor,” Sood added.

The book builds on the theme of Commercial Justice through the Insolvency and Bankruptcy Code of 2016 and the amendments in the same year in the Arbitration and Conciliation Act of 1996 “that brings the arbitration law in sync with the prevalent laws in advanced economies. The governments in the past also endeavored to bring in the concept of Commercial Justice through a gamut of laws but they failed on the ground,” Sood said.


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