Mediation For Insolvency Resolution: A Bespoke Approach For The Insolvency Bankruptcy Code 2016
- IJLLR Journal
- May 22
- 1 min read
Aswin P S, LLM, NLIU, Bhopal
ABSTRACT
The Insolvency and Bankruptcy Code 2016 established a comprehensive legal framework intended to expedite the recovery or liquidation of distressed holdings within predetermined timeframes. While the central goal of this legislation is to optimize asset worth through a creditor-in-control model, statistics provided by the IBBI suggest that proceedings are frequently turning into hostile legal battles instead of cooperative efforts. Judicial bottlenecks driven by high volumes of interlocutory applications under Section 60(5) have led to systemic delays where resolution plan approvals far exceed the absolute statutory limit.
This research examines the necessity of integrating a bespoke voluntary mediation framework that operates on a parallel track to the Corporate Insolvency Resolution Process. It identifies a fundamental structural misalignment between the general Mediation Act 2023, which focuses on in personam disputes, and the in rem nature of insolvency proceedings that impact the collective body of creditors and public interest. The study analyses the recommendations of the IBBI Expert Committee Report 2024 and the proposed Insolvency and Bankruptcy Code Amendment Bill 2025 to synthesize a model utilizing NCLT-annexed secretariats and specialized panels. By evaluating international blueprints from the United States Chapter 11, Singapore, and the European Union, this paper demonstrates how mediation can resolve specific technical bottlenecks such as claims reconciliation and inter-creditor conflicts. The research concludes that transitioning to a collaborative rescue culture is a strategic necessity to preserve the economic value of distressed enterprises.
Keywords: Insolvency and Bankruptcy Code 2016, Mediation, Corporate Insolvency Resolution Process, NCLT, Alternative Dispute Resolution, Rescue Culture, IBBI, In Rem, Parallel Track, Value Maximization.
