Ravi Mittal, chairperson, Insolvency and Bankruptcy Board of India (IBBI) said companies in India have yet to learn to use the Insolvency and Bankruptcy Code (IBC) to make themselves more productive.
The insolvency regulator would be keen to study and resolve any roadblocks they face, he added.
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Mittal was speaking at an event organised by the Associated Chambers of Commerce and Industry of India (Assocham).
“In India, it is the creditors who file for insolvency in most cases. It is preferable when companies come forward themselves, as that is when value destruction is the least,” he said.
IBBI chief compared the insolvency data of the developed world, and highlighted that around 63,000 of the total 66,000 insolvency applications filed in the US were voluntary by the companies themselves.
“This means that insolvency is not an adversarial process,” he mentioned.
Ravi Mittal said that cases worth Rs 11 lakh crore had been settled through IBC by withdrawal even before they reached the admission stage, showing that the IBC had changed the debtor-creditor relationship.
He said that the fear of law is better than using the law. People today do not want to default.
In the last eight years, Mittal said, IBC has provided the best exit mechanism to companies while returning Rs 3.6 trillion to creditors, enabling banks to lend much more.
He further stressed the need for the private sector to ramp up its investment in infrastructure to contribute towards India’s goal of becoming a developed country at the earliest.
