Mumbai : Finance Minister Arun Jaitley said on Saturday that while previous laws were only partly effective in resolving the problems of insolvency and bankruptcy in the corporate world, one would have to wait to judge the effectiveness of the current mechanism to deal with the issue.
“Earlier, if companies were for insolvency, they got stuck in courts indefinitely. The SICA merely provided an ‘Iron Curtain’ against debtors, otherwise it was an absolute failure and could achieve very little of the purpose for which it was created,” Jaitley said.
The Debts Recovery Tribunal (DRT) was somewhat faster, but not as effective as envisaged, while the Sick Industrial Companies Act (SICA) failed and the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act (SARFAESI) served a limited purpose since being a creditor inherently put one at a disadvantage under it, he said.
The issue is being currently addressed by the Insolvency and Bankruptcy Board of India (IBBI).
It will facilitate a better understanding of intricacies of the Insolvency and Bankruptcy Code, 2016 (‘Code’), share the experiences gained during the initial nine months and also discuss the challenges that need to be overcome, the Finance Minister added.
Jaitley made the remarks while addressing the National Conference on Insolvency and Bankruptcy: Changing Paradigm, organised by the Ministry of Corporate Insolvency and Bankruptcy Board of India.