Parliamentary Committee Stresses Need For Reforms In Bankruptcy Resolution

New Delhi, Feb 8 (KNN) The Parliamentary Standing Committee on Finance, led by Jayant Sinha, has emphasised the necessity for extensive reforms in the bankruptcy process.

Their primary objectives include accelerating admissions, augmenting judicial capacity, and enhancing the proficiency of resolution professionals.

Previously, the committee advocated for the establishment of dedicated bankruptcy courts within the National Company Law Tribunal (NCLT) framework, alongside specialized benches for the Micro, Small and Medium Enterprises (MSMEs) segment.

Upon reviewing the progress on their earlier recommendations, the committee acknowledged the implementation of a two-tier regulatory structure for developing insolvency professionals. Yet, they underscored the need for further action.

Expressing concerns over the complexity of the resolution process and the penalties faced by resolution professionals, the committee emphasised the imperative to reassess the rules governing their functioning.

They stressed apprehensions regarding the professionals' capability in ensuring timely resolution, particularly for large companies entangled in complex cases.

The committee stated, "Given the complexity of the resolution process and the number of penalties on resolution professionals, the committee continues to be apprehensive of their capability in carrying out time-bound resolution of huge companies with complex cases and believes that there is a need to revisit the rules regarding the functioning of these professionals."

The committee also flagged instances of misinformation and lack of awareness among resolution professionals regarding the Corporate Insolvency Resolution Process, resulting in penalties imposed by the Insolvency and Bankruptcy Board of India.

Furthermore, they advocated for staffing NCLT benches based on projected case flows and enhancing the capacity of professionals.

(KNN Bureau)