Bankruptcy Code – A Much-Needed Boost For Corporate Bond Market?

Introduction

From an investor's standpoint, a robust and effective bankruptcy regime is a prerequisite for the development of the corporate debt market. However, the existing insolvency and bankruptcy framework is highly fragmented, which has led to complex issues on how to reconcile various statutes with one another.

Further, the existing framework has proved to be time consuming and cumbersome. As per the World Bank Group's data, resolving insolvency proceedings in India takes approximately 4.3 years on average, whereas it takes six months in Japan, eight months in Singapore, one year in Malaysia and the United Kingdom and 18 months in United States.⁽¹⁾

In order to resolve this serious issue, the government recently enacted the Insolvency and Bankruptcy Code 2016, which essentially consolidates the existing legal regime for insolvency and bankruptcy proceedings in India.