ADR In Corporate Insolvency: The IBC Framework And Role Of Pre-Pack Resolution Plans
- IJLLR Journal
- 23 hours ago
- 2 min read
Priyanka Ganguly, Ph.D. (Law) Research Scholar, School of Law & Jurisprudence, Shri Venkateshwara University, Gajraula, U.P.
Dr. Rajvardhan, Assistant Professor, School of Law & Jurisprudence, Shri Venkateshwara University, Gajraula, U.P.
ABSTRACT
Corporate insolvency has long posed a critical challenge to the financial stability and economic growth of any jurisdiction. In India, the enactment of the Insolvency and Bankruptcy Code, 2016 (IBC) brought about a revolutionary shift by creating a consolidated, time-bound, and creditor- driven process for resolution of corporate distress. Despite the significant strides made under the IBC, the formal litigation-centric structure of insolvency proceedings often leads to value erosion, delays, and adversarial posturing among stakeholders. As a solution, Alternative Dispute Resolution (ADR) mechanisms such as negotiation, mediation, and arbitration have emerged as complementary tools that facilitate faster, more consensual resolutions in corporate insolvency.
This paper delves into the interface between ADR and the IBC, analysing how legal provisions and judicial interpretations have evolved to accommodate and promote settlement frameworks within insolvency. A special focus is given to the Pre-packaged Insolvency Resolution Process (PIRP), introduced in 2021 as a hybrid model that integrates informal workouts with formal legal sanction. The pre-pack regime, particularly for MSMEs, is designed to expedite resolution while maintaining transparency and creditor oversight. Through detailed examination of statutory provisions, regulatory developments, and landmark case laws such as Swiss Ribbons v. Union of India and Indus Biotech v. Kotak1, the paper evaluates the effectiveness, challenges, and future prospects of integrating ADR within the IBC framework.
The research further draws comparisons with global practices in the UK, US, and Netherlands to offer a holistic understanding of pre-pack mechanisms and the potential for harmonizing India’s insolvency landscape with international standards. It concludes with recommendations for legal reform, broader implementation of ADR, and institutional capacity-building to enhance the efficiency and accessibility of corporate insolvency resolution in India.
Keywords: Insolvency and Bankruptcy Code (IBC), Corporate Insolvency, Alternative Dispute Resolution (ADR), Pre-packaged Insolvency Resolution Process (PIRP), Mediation in Insolvency.
