Page 30 - Banking Finance August 2024

ARTICLE

GROUP INSOLVENCY

FRAMEWORK - AN

EAGERLY AWAITED

AMENDMENT TO THE

INSOLVENCY AND

BANKRUPTCY CODE

(IBC).

Abstract:
Insolvency and Bankruptcy code (IBC) was introduced in 2016 to provide for a robust and efficient insolvency eco-
system in India. At present, the insolvency regime takes up insolvency proceedings on individual entity basis i.e. each
corporate debtor is treated as an individual entity and resolution is done accordingly. However, there are a growing
number of cases wherein companies which are a part of same corporate group come for insolvency resolutions. These
cases are dealt with in isolation in the absence of a framework to have a common resolution for them. Issues related
to interconnectedness of group companies have taken center stage in several insolvency proceedings. Thus, a demand
for a "Group Insolvency Resolution Framework" has been voiced by the stakeholders of the IBC ecosystem.

Against this backdrop, this article attempts to throw some light on the various facets of the Group Insolvency
Mechanism, the likely benefits of such a framework and the global legislations and cross border practices in this regard.
The article also highlights the various measures taken by the government and the Insolvency and Bankruptcy Board
of India (IBBI) for evolving the Group Insolvency norms.

I eco-system in India. Over the years, IBC has gained
About the author nsolvency and Bankruptcy code (IBC) was introduced
in 2016 to provide for a robust and efficient insolvency
Abhijit De prominence in terms of loan recovery. Among all modes
Chief Manager (Research) of recovery, IBC has accounted for 43.0 per cent in the total
State Bank Academy amount recovered in 2022-23 (Trend & Progress of Banking
Gurugram.
in India, RBI, December 2023). However, IBC is not merely

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