The five-year-old game-changing insolvency and bankruptcy code (IBC), which deals with corporate insolvency, resolution, and restructuring, is often criticized for bad implementation, several amendments, and also a very low loan recovery for financial creditors like banks. But is it fair to criticize a new law only on a single parameter, which is the low recovery rate? Most of the cases that came in the first five years were the defaulters with unsustainable debt, written off cases and loans where earlier recovery efforts had failed. Some experts have even termed the new code as a place for liquidation than resolution. The strict timelines of 180 days with a maximum of 270 days under the IBC actually got breached by a big margin. The higher cases also happened because of operational creditors using the code for getting their outstanding and disputed claims. Like any other law, the IBC also needs more reforms. The next five years of IBC will be crucial as the next batch of fresh NPAs post-Covid will again test the effectiveness of the code.
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