Sh. Sudhaker Shukla took charge as Whole-Time Member, Insolvency and Bankruptcy Board of India on 14-11-2019. As a member of the Indian Economic Service, he has a vast experience of over 34 years in various capacities across ministries and departments of the Government of India. His last assignment was as Chief Economic Adviser in the Ministry of Rural Development. Earlier, he also served as Adviser in African Development Bank, Tunis, representing India, Denmark, Sweden, Norway and Finland. He also worked in the Ministry of Finance dealing with matters pertaining to the World Trade Organisation (WTO), trade, African Development Bank and infrastructure projects of World Bank. His primary domain of specialisation is in energy, infrastructure and regulatory practice. Apart from being involved in rolling out key public private partnership (PPP) module under the Electricity Act, 20031, he was also entrusted with responsibilities of drafting the Mines and Minerals (Development and Regulation) Amendment Act, 20152 to promote fair and transparent regimes in distribution of natural resources through auctions. He was also designated as appellate authority of Mines Tribunal under the Mines and Minerals (Development and Regulation) Amendment Act, 2015 by Ministry of Mines. He is currently looking after Research and Regulation Wing comprising Corporate Insolvency, Corporate Liquidation (including Voluntary Liquidation), Individual Insolvency and Individual Bankruptcy, Research & Publication, Data Management & Dissemination and Advocacy. In addition, he is also handling Human Resources, National Insolvency & Graduate Insolvency Programmes, Continuing Professional Education and Knowledge Management & Partnership divisions in the Insolvency and Bankruptcy Board of India (IBBI).
Ques. 1: Kindly introduce yourself to our readers
In a career spanning over 39 years of service, as a distinguished member of the 1985 batch of Indian Economic Services, I had the privilege to be part of some path-breaking initiatives, in various capacities, in various ministries of the Government of India. The grounding in Economics, Public Administration and Public Economic Management drove professional efficacy to excel in handling issues related to economic policy. Before joining the service, I completed postgraduate degrees in Economics and Public Administration and Master of Philosophy (MPhil) in Public Economic Management from University of Birmingham, where I was awarded with the Order of Merit. I served as Chief Economic Adviser in the Ministry of Rural Development and Adviser to the African Development Bank, representing five countries. Renowned for regulatory expertise, I played key roles in drafting the Electricity Act, 2003 and Mines and Minerals (Development and Regulation) Amendment Act, 2015 and oversaw various corporate and individual insolvency functions at the IBBI. In capacity of Whole Time Member of the Insolvency and Bankruptcy Board of India, I completed my five-year tenure in September 2024.
Ques. 2: In what ways did your education contribute to your professional growth?
I do not hold a pragmatic or static view on the learning process. Sharpening of skills is a never-ending process. As noted Indian philosopher Dr Jiddu Krishnamurti opined, “There is no end to education. It is not that you read a book, pass an examination, and finish with education. The whole of life, from the moment you are born to the moment you die, is a process of learning”. Having a strong foundation of Economics and Public Administration, surely was facilitative in capturing finer nuances associated with economic policymaking. Nevertheless, the rendezvous with real-time experiences, initially in the domain of public-private partnerships, helped concretise ideas around what works and what does not. In the context of “Pareto optimality” in the delivery of public good, it opened up all new horizon to acquire, perform and excel.
Ques. 3: Your distinguished career and achievements reflect a deep commitment and tireless efforts across various roles. Could you share how you have managed to maintain a work-life balance amidst such demanding responsibilities, and what principles have guided you in reaching the position that you hold today?
I must confess that as public servant singularly no one can choose options, opportunities, responsibilities and delivery points as they come as a bouquet associated with the post and furthermore, accomplishments are to be seen as an outcome of teamwork which rather follows inefficient hierarchical order. Therefore, teamwork, leadership qualities and balancing the interest of all the stakeholders becomes of paramount importance in curving out your niche. Moot point is that organisational work balance is a first order priority to begin with. The work life balance is a subordinate or at best, is a second order priority. As old saying goes, life is a balance of holding on, letting go and knowing when to do which of the two. This provides important insight to be judiciously cautious about religiously pursuing a holistic approach with Abhimanyu’s determination and Arjun’s focus, added with self-righteous zeal, recognising that it is karma that is supreme.
Ques. 4: In your opinion, what has been your most significant achievement at the Insolvency and Bankruptcy Board of India (IBBI) since you took charge in 2019?
Data points and research on the subject in unionism showcase a resounding success of the Insolvency and Bankruptcy Code, 2016 (IBC) in a very short span of time. Though it is not a recovery tool, yet the Reserve Bank of India (RBI) Report on “Trend and Progress of Banking” observes that the scheduled commercial banks in last 5 years have recovered Rs 4,65,500 crores through various channels, out of which the recovery through the IBC stood as dominant channel at Rs 2,50,215 crores (54%). The behavioural change in debtor-creditor relationship is evident as about 29,000 applications involving realisable value of over Rs 10 lakh crores have been settled as withdrawn before the admission stage. In terms of World Bank’s Ease of Doing Business, India leapfrogged to 52nd position from 136th position in just 4 years’ time. The World Bank has discontinued the rankings at present and is coming out with alternative methodology of Business Ready Report and surely, we are expected to be the front runner country in terms of insolvency regime reforms. The IBC was rolled out to address the unsustainable twin balance sheet problem. Now as non-performing assets of the banks after recording the peak of 11.2% in 2017-2018 has swiftly declined to 2.8% in 2023-2024, referencing this unprecedented achievement, Prime Minister recently, lauded the role of the IBC and mentioned that the “twin balance sheet” problem is behind us and financial sector is robust and fully geared towards meeting the aspiration of Viksit Bharat.
Empirical foundation is vital for any path-breaking economic reform. For a comprehensive systems approach, it is imperative to move towards research-based decision-making. Though, the IBC is only 8 years old, large literature is surfacing to showcase its efficiency and efficacy. As per Indian Institute of Management (IIM) Ahmedabad study on the resolved cases, it is empirically established that post resolution average sales increased by 76%, employee expenses by 50% and liquidity improved by 80% and market capital of 21 public listed companies resolved under the IBC increased by over 34 times. Bank for International Settlements study showcases a positive impact on Foreign Exchange (FX) hedging by firms and currency mismatches stand reduced in post the IBC era. Dr Rajeswari Sengupta and Vardhan find out that credit spreads on various quality of bonds had reduced.
Ques. 5: Looking back on your multifaceted career, what do you consider your most impactful contributions to economic policy and regulatory reform?
I was singularly lucky to be associated with plethora of game changing regulatory reforms. My services were intricately involved, in the context of developing structures for fostering public-private partnership associated with World Bank’s infrastructure projects and also in rolling out of Ultra Mega Power Projects in the country. Ultra Mega Power Projects (UMPP) ultimately has proven to be game changer as ushered in quantum leap in generation capacity addition and efficient role out of the super critical technology in the country. I said in response to Question 1, I was fortunate to be provided with an opportunity to give my critical inputs which were necessary for drafting of the Electricity Act. In Ministry of Mines too, I got the role to be part of the Drafting Committee to redesign the Mines and Minerals (Development and Regulation) Amendment Act, 2015, to facilitate allocation of major minerals through auctions. However, from regulatory perspective, I cherished the opportunity offered by IBBI the most. There is a reason to say so. In early 1990s, opening of opportunity of entry into the market and sustain the competition was of the nature of semi-socialist as capitalist framework required a robust framework for “freedom to exit” as well. Freedom to exit is in the heart of fostering what Joseph Schumpeter referred as the cycle of churning or creative destruction. As Mark Zuckerberg said, “The biggest risk is not taking any risk. In a world that is changing really quickly, the only strategy that is guaranteed to fail is not taking risk”. Developing risk-taking entrepreneurship is the key for economy in its drive towards maturity and remaining on the golden path of accumulation. Lot of attention in the IBBI is on getting the designing principles associated with freedom to exit right as one has to continuously be mindful that honest failings should not be unnecessarily punished.
Ques. 6: What challenges do you foresee in the coming years in the field of insolvency and bankruptcy in India, and how is IBBI preparing to address them?
Tryst with destiny is a topsy-turvy path. Within a few months of joining the IBBI, fear of Covid-19 Pandemic gripped the world. As we were staring at uncertain future, immediate task at hand was to keep placer in place, stemming the corporate debtors from entering the system on the one hand and provide hybrid options especially to Ministry of Micro, Small and Medium Enterprises (MSMEs) to cater to their specific needs. Provisions of Sections 7 and 9 were suspended to stop new cases from being filed. The threshold limit of default was raised to Rs 1 crore. On the maturity of systems, it can be said that the Insolvency and Bankruptcy Code, 20163 (Code) envisaged standard, plain vanilla processes to start with, but anticipated sophisticated options with the maturity of the ecosystem. With considerable learning and maturity of the ecosystem, and a reasonably fair debtor-creditor relationship in place, the ground seems ready to push the envelope a bit further. Through amendment in the Code, pre-packs or pre-packaged insolvency resolution process (PPIRP) was introduced, which, in deviation to standard creditor in control model, provided and empowered MSMEs to appropriately keep control of the Corporate Debtor (‘CD’) while suggesting the restructuring plan in consultation with the creditors. The statistics around pre-packs do not show encouraging results, yet market is already making huge demand to open up pre-packs for non-MSMEs as well. An Expert Committee under my Chairmanship has recommended creditor-led resolution approach which recommends gradual approach towards assigning greater role to the Corporate Debtor in driving the restructuring process.
Out-of-court workouts is another area which may gain prominence over period of time. The Mediation Act, 20234 has already approved by the Parliament, and it does not exclude the IBC from its ambit. In rem proceedings and inter se prevalence of creditor’s right make it seemingly not a fit case to be dealt through the Mediation Act, 2023. Nevertheless, as IBBI discussion has already spelt the way forward, Section 9 applications are the right set of applications where mediation can help reducing the admissions. Cross-border and group insolvency are other important areas for which groundwork is ready, and one must look forward to their earlier role out. As Finance Minister in her Budget Speech this year has already announced the rolling out of state-of-the-art technological platform, with Integrated Platform for Insolvency Ecosystem (iPie)in place, case management for streamlining the processes and judicial functioning will become a reality sooner than later. Further, in its judgment, SBI & Ora. (Lender) v. the Consortium of Mr. Jalan and Mr. Fritsch & Anr., dated 7th November, Supreme Court has come out with extensive wish list for procedural reforms. Oversight Committee over Committee of Creditor and Monitoring Committee for overseeing the earnest implementation of the resolution plans are critical and needed to be rolled out early.
Ques. 7: As you continue to shape the field, what legacy would you like to leave behind, and what future goals drive your efforts today?
During my stay with IBBI, 83 regulatory interventions were made. These were aimed at strengthening the ecosystem and other procedural reforms. As a regulator, I feel that flexibility through sand box approach is of vital importance. Rigid confines of the Code, in a way, hinder market driven smart course correction. Be it the question of streamlining the liquidation regime vis-à-vis corporate insolvency process, approaching the sectoral approach specially that of real estate sector, be it a question of regulator’s financial autonomy or developing framework for participation of sectoral experts in the process; all need out of box solutions.
Another thought in the related field is that the issues of a regulator nudging the process after the admission is unthinkable of as of now. Such adventurism, if it happens at any point of time, will adversely impact the market-based solution for a market problem. Further we have to zealously guard the regulator from any possibility of regulatory capture by any interest group or any other stakeholder. If that happens, the principle of balancing the interest of all the stakeholders would stand compromised.
Ques. 8: Based on your work with international organisations, how do you think India could adopt to enhance its insolvency and bankruptcy regulations?
International insolvency regime has history of over 200 years. United Nations Commission on International Trade Law (UNICITRAL) Model laws came much later. Theoretical underpinnings, of these reforms point towards the fact that best practices are inevitably context specific. In the words of Prof. Levy, who in 2011 propounded that best practices often refer to socio-economic and political milieu which cannot be replicated in the context of a particular country. While designing Indian insolvency regime; three innovations have been tried. Firstly, to address the issue of information asymmetry, information utility, National E-Governance Services Limited (NeSL) was established as single truth on debt and default. Secondly, IBBI was established as a unique regulator. Recommending the same, Bankruptcy Legislative Reforms Committee (BLRC) justified it by mentioning, “The Committee recognises that it is not possible, at present, to fully design every last procedural detail about the working of the bankruptcy process. Further, the changing institutional environment in India will imply that many procedural details will need to rapidly evolve in the future. Hence, the Committee has taken the strategy of establishing a regulator to be called the Insolvency and Bankruptcy Board which will be given clear regulation-making powers about certain elements of procedural detail”. Thirdly, to build the insolvency cadre over period of time, graduation insolvency programme was experimented with.
About international experience, especially with Nordics; which have fairly advance insolvency regimes, lessons were clear that cross-border issues needed to be prioritised at European Union (EU) level instead of each country designing its own framework. Now we are not part of any harmonious group, therefore we have to be extra cautious in designing the reciprocity requirements, public policy exceptions and in dealing with conflict/diversity of laws on the issues around moratorium.
Ques. 9: In your view, how can law schools in India more effectively promote and integrate education in insolvency law? What specific changes or enhancements would you recommend to academic curricula, and how do you believe these educational advancements could contribute to strengthening the insolvency sector in India?
Richard A. Posner in his book Economic Analysis of Law argues that in a comprehensive analysis of common law doctrines, precedents established in the law of property, law of contracts, and the law of torts reflect the standard of economic efficiency. Transgressing the boundary of morality and justice to bring in economic research and its interpretation is considered as leap of faith. Over period of time, especially in advanced countries, fusion of law and economics has added behavioural dynamics. Availability of large data-driven evidence, points conclusively that nudging can manipulate the revealed economic choices. As specialised domains crumble under the weight of empirical insights, both economic and law converge must broaden to adopt a holistic approach. Corporate law and evolving economic law principles throw open spectrum of new possibilities wherein, understanding on string would be futile without integrating the core subjects professed by other subjects of social sciences backed by game theory and econometrics. This fusion is bound to strengthen in leaps and bounds with the popularisation of artificial intelligence. Surely, academic curricula are undergoing an interesting transition as information asymmetry across the specialised fields will eventually breach in a very short span of time, however, having specialised institutions and hybrid degrees to cater the needs of emerging market will still be a far cry.
Ques. 10: What is your advice for students aspiring to establish a career in Insolvency Law?
Our regime is only eight-years’ old. However, the judicial pronouncements endorsing the provisions of the Code and amendment thereto are available in a very elaborate manner. Understanding the nuances as discussed in these pronouncements are in a way solid starting point for any law student budding for specialisation in the insolvency space. IBBI website is highly rich in terms of content, discussion papers and related research work. BLRC Report is of relevance, large number of judgments have drawn inferences from this document. Cases under the IBC are on the rise, so is the opportunity for specialised cadre of graduate insolvency programme (GIP) and law students to curve out their niche. In addition, support systems around insolvency regime are also thieving and making big name. Joining these support services again is a lucrative and expanding area. If one has the interest, sky is the limit in terms of opportunities.
2. Mines and Minerals (Development and Regulation) Amendment Act, 2015.