On 11 May 2016, the Insolvency and Bankruptcy Code (IBC) was passed by India’s Upper House of Parliament, the Rajya Sabha, an important milestone in bankruptcy reforms in India.
It had until now been widely acknowledged that India had no consistent framework for dealing with bankruptcies. As a result, companies in different industries face varying degrees of legal and government supervision, with liquidation and supervised debt restructuring processes often only implemented when a crisis is imminent. As has been highlighted by recent high profile insolvencies such as Kingfisher Airlines, India’s banking sector is also hindered by an inability to launch bankruptcy proceedings against corporate defaulters.
Penningtons Manches partners Phillip D’Costa and Séamas Gray have been supporting members of the team, including the Reserve Bank of India (RBI) who helped to develop the legislative framework for the new code, since 2014, both prior to the setting up of Bankruptcy Law Reform Committee (BLRC) in 2015 and since then. The BLRC released its interim report in early 2016, recommending major changes to existing laws and outlining a roadmap for implementation. The report includes frank descriptions of limitations and inconsistencies in the current bankruptcy framework in India together with a review of best practices from the UK, USA and Sweden.
As India and UK insolvency experts, Phillip and Séamas attended meetings with a RBI delegation hosted by the Law Society of England & Wales; a roundtable hosted by the City of London with members of the BLRC; and a follow up meeting and exchanges with a delegation from IGIDR Finance Research Group at Penningtons Manches’ London office.
Susan Thomas, the leader of the Finance Research Group, said: “Talking to you yielded a lot of detail that we would not have found in our searching in the public domain on questions of how the IP practice works on the ground.”
Commenting on their role in supporting the development of the new Insolvency and Bankruptcy Code, Phillip D’Costa said: “We are very pleased to have been able to share our experiences of the English insolvency regime with the delegation. As a firm with both a specialist India group and restructuring and insolvency team that frequently advises on a wide variety of cross-border transactions and recoveries, we are well placed to advise on cross-border insolvencies that have an Indian enforcement angle.”
Susan Thomas and BLRC member, Dr Ajay Shah’s article entitled “Indian bankruptcy reforms: Where we are and where we go next” can be read here.