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Budget Must Boost NCLT Infrastructure to Cut IBC Delays: SAM's Rawat

Anoop Rawat of Shardul Amarchand Mangaldas advocates for enhanced infrastructure and more benches at the National Company Law Tribunals in the upcoming Union Budget to address delays in insolvency cases. He acknowledges the IBC's success in boosting investor confidence and the government's proactive amendments, including a new creditor-led framework. While delays and low recovery are part of the stabilization phase, Rawat emphasizes that institutional strengthening is a critical focus area. The new amendments aim for a more cooperative resolution process and are expected to significantly reduce the time taken to admit cases.

Key Points: Boost NCLT Infrastructure in Budget to Reduce IBC Delays

  • Strengthen NCLT infrastructure
  • Improve IBC efficiency
  • New creditor-led resolution framework
  • Reduce case admission delays
3 min read

Budget must prioritise NCLT infrastructure to reduce Insolvency and Bankruptcy Code delays: SAM's Rawat

SAM's Anoop Rawat urges govt to strengthen NCLT benches in the Union Budget to improve insolvency resolution efficiency under the IBC.

"What we need is the strengthening of the infrastructure at the NCLTs. We need more and more benches. - Anoop Rawat"

New Delhi, January 31

The government should focus on strengthening infrastructure at the National Company Law Tribunals to improve efficiency in insolvency cases under the Insolvency and Bankruptcy Code in the upcoming Union Budget, asserted Anoop Rawat, National Practice Head at Shardul Amarchand Mangaldas & Co.

"What we need is the strengthening of the infrastructure at the NCLTs. We need more and more benches," Rawat said in an interview with ANI, when asked what one change would make the IBC stronger immediately.

The Union Budget for 2026-27 will be tabled in the Parliament on Sunday morning.

Rawat said the IBC has significantly improved investor confidence.

He said the Government of India has always been very active in responding to the need to amend the code, occasioned by economic shifts, such as the pandemic, or by meeting creditors' and other stakeholders' expectations.

He said that, drawing on experience with the code's implementation, the government has introduced path-breaking amendments, including a new creditor-led resolution framework and provisions for cross-border insolvency.

He said these provisions, among others, are likely to further improve investor confidence and strengthen the country's rescue framework.

When asked about the biggest issue of the IBC in today's world, Rawat said delays and low recovery have been issues.

"But, frankly, delays and low recovery are usual in the stabilisation phase," he said, adding that the insolvency code has worked exceptionally well.

However, he said there are certain areas where some focus is needed and said institutional strengthening and improving bench strength are two important areas.

On whether the new IBC amendments will speed up resolutions, Rawat said, "absolutely."

He said there are many expectations from the new amendments and that they are intended to move toward a more cooperative approach rather than a potentially adversarial one.

He said the new amendments aim to involve the existing management in the resolution, provided there are initial efforts to resolve it more quickly. He said there will be phase-wise resolution processes.

"First, it will be a creditor-led resolution framework where the creditor and the debtor together will try to attempt a resolution," he said. If that fails, Rawat said it moves to the second resolution process, which is the CIR process, where the management has to give way to the insolvency professional who then carries on the process.

On NCLT and NCLAT, Rawat said the number of cases reflects the state of the economy and will continue to fluctuate.

He said NCLT and NCLAT would always remain busy. Rawat said that, after the amendment, the time taken to admit cases will decrease substantially. He said the amendment is expected to be taken up in the ongoing Budget session of Parliament.

- ANI

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Reader Comments

P
Priya S
The IBC has been a game-changer for investor confidence, no doubt. But delays erode the very value it seeks to protect. Strengthening NCLT infrastructure should be a top priority in this budget. We need faster resolutions to unlock capital and save jobs. 🙏
R
Rohit P
While I agree with the need for more benches, I respectfully think the focus should also be on the quality of appointments and training of members. Just adding more seats won't solve the problem if the decision-making isn't swift and consistent. The amendment for creditor-led resolution sounds promising though.
S
Sarah B
As someone working in the Indian startup ecosystem, a robust and fast insolvency framework is crucial. Investors hesitate when they see cases dragging for years. Speeding up NCLT processes will make India a much more attractive destination for foreign capital. Good points by Mr. Rawat.
V
Vikram M
The cooperative approach mentioned is key. In our culture, often a 'saam, daam, dand, bhed' approach is needed before full-blown litigation. If creditors and debtors can sit together first, many stressed assets might find a solution without clogging the tribunals. Bahut accha suggestion hai.
K
Karthik V
Low recovery rates are a serious concern for banks already grappling with NPAs. If the new amendments and better NCLT infrastructure can improve the speed AND the value recovered, it will be a huge boost for the entire banking sector. Budget allocation here is an investment, not an expense.

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