Presenting the Union Budget 2024-25 in the Lok Sabha, Finance Minister Nirmala Sitharaman announced significant measures related to Insolvency and Bankruptcy, aiming at enhancing judicial efficiency and technological integration.
Key highlights include the development of an integrated tech platform, the strengthening of existing tribunals, and the establishment of additional benches of the National Company Law Tribunals (NCLTs) and Debt Recovery Tribunals (DRTs). Some of these new benches will be specifically dedicated to resolving matters under the Companies Act, 2013.
The finance minister; Nirmala Sitharaman mentioned that “the insolvency and bankruptcy regime helped in the direct recovery of more than INR 3 lakh crore for creditors and assisted in the resolution of more than 100 companies”. She also proposed the services of the Centre for Processing Accelerated Corporate Exit (C-PACE) to be extended for voluntary closure of Limited Liability Partnerships (LLPs), thereby reducing the closure time for LLPs.
According to us, technology is crucial for simplifying complex processes and improving outcomes. The proposal to establish this platform represents a major step toward modernizing the insolvency framework and enhancing its efficiency. The integration of tech platform will boost the efficiency and consistency in the insolvency regime which will further help in fast tracking and streamlining the entire process. Although the details are still pending, if an integrated tech solution can deliver organized solutions for the IBC’s time-bound processes, it has the potential to greatly advance the IBC ecosystem.
Moreover, the addition of specialized benches will improve the ease of doing business in India, provide a fast exit route to companies, securing creditors, and provide a time effective solution. It will significantly mitigate the backlog of insolvency and DRT cases and reduce the burden on the existing NCLT and DRT benches, thereby strengthening India’s insolvency and debt recovery framework. The introduction of these additional benches will also ensure more focused and expert adjudication in complex company law matters that require specialized attention. The introduction of C-PACE will also accelerate and streamline the exit process for LLPs.
Together, these government proposals are set to strengthen confidence among stakeholders including investors, creditors, and corporate entities in the judicial process.
– Shikha Ginodia, Partner
Akash Chaudhary, Trainee Associate
