Legal Challenges In Corporate Bankruptcy And Insolvency Proceedings In India: A Critical Analysis
- IJLLR Journal
- Mar 9
- 2 min read
Julit Susan Easo, Christ (Deemed To Be University), Bangalore
ABSTRACT
Corporate bankruptcy and insolvency laws are crucial for maintaining economic stability, protecting creditors, and ensuring efficient resolution of distressed businesses. These laws provide a structured mechanism for handling financial distress, preventing economic disruptions, and fostering investor confidence. In India, the Insolvency and Bankruptcy Code (IBC), 2016, was introduced as a landmark reform to streamline and expedite insolvency proceedings by consolidating multiple existing laws under a single framework. The IBC was designed to provide a time-bound resolution process, promote creditor-driven recovery mechanisms, and enhance the ease of doing business in the country.
However, despite its progressive framework, the implementation of the IBC has encountered numerous legal and procedural challenges. Persistent delays in insolvency resolution, excessive judicial interventions, and a heavy backlog of cases in the National Company Law Tribunal (NCLT) and National Company Law Appellate Tribunal (NCLAT) have undermined its effectiveness. Additionally, conflicts among stakeholders, including financial and operational creditors, promoters, and resolution professionals, have led to prolonged litigation and uncertainty in the resolution process. Regulatory ambiguities, frequent amendments, and evolving judicial interpretations have further added to the complexity of corporate insolvency proceedings in India.
This paper critically examines the key legal hurdles affecting corporate bankruptcy and insolvency proceedings in India, with a focus on systemic inefficiencies, inconsistencies in judicial decisions, and challenges in implementing a uniform insolvency resolution mechanism. Furthermore, it evaluates the effectiveness of recent amendments to the IBC and landmark judicial rulings in addressing these issues. By analyzing case laws, regulatory developments, and global best practices, this study aims to provide insights into potential reforms that could enhance the efficiency and effectiveness of corporate insolvency resolution in India.
Keywords: Bankruptcy, insolvency, NCLAT, IBC, SARFAESI
