The Third Edition of its Insolvency Law Academy Conference hosted by Insolvency Law Academy, the 3rd meeting of ILA’s Insolvency Scholars Forum and the 2nd meeting of ILA’s Emerging Scholars Group in happening from 14th-16th March at Tijara Fort, Alwar.
Mr Batra also throws light on first Emeritus Fellowship and how Bibek Oberio, a well known economist and ILA was started in his office room.
The conference started with the special Addresses by Justice Rakesh Kumar Jain, Hon’ble Judicial Member, National Company Law Appellate Tribunal where he spoke about threshold increase from 1 lakh to 1 crore within 4 years.He further focussed on only 5 benches of NCLAT and there is need of upgradation of infrastructure as the need of the day. He also highlighted that the employees of NCLT and NCLAT are not permanent.
Dinkar Venkatasubramanian, Vice President Designate, INSOL International; President, INSOL India in his special address spoke about the stressed asset perspective and also, stressed on India’s position is imperative to sustain the level of growth. He also focussed more on turnaround and restructuring Before reaching the stage in insolvency. He highlighted the need of more trust between stakeholders involved in IBC process.
Insolvency Regimes: Looking Through the Rearview and the Windshield Insolvency laws have gone through a series of transformation ever since the process of modernisation began in the early 20th century. Economic, social and global events have shaped the journey of insolvency reforms. Many institutions have worked with policymakers and experts to make insolvency systems robust to minimise the shocks of global and national events, and to make insolvency reforms efficient and effective even otherwise. The world has come a long way since the exercise for standard setting and global benchmarking of insolvency systems started. Although, many efforts have been made to keep pace with the rapid global developments, it is always the effort of experts to keep a close watch on the preparedness of the insolvency systems to deal with crisis and changing times. In this backdrop, this session, a distinguished panel of experts from around the world will discuss the key developments that have taken place in the last few decades, their relevance in the present times and adjustments that may be necessary to keep the insolvency reforms relevant and impactful to meet the changing times.
Speakers
James H.M. Sprayregen, Vice Chairman, Hilco Global, USA
Antonia Menezes, Senior Financial Sector Specialist, The World Bank Group, USA
Prof. Dr. Reinout D. Vriesendorp, Professor of Insolvency Law, Leiden Law School, Leiden University, The Netherlands
Dinkar Venkatasubramanian, Vice President Designate, INSOL International; President, INSOL India
Pooja Mahajan, Partner, Chandhiok & Mahajan, Advocates and Solicitors moderating the session.
Antonia Menezes discusses the importance of understanding both current and future solvency trends by first considering broader financial sector developments. According to the World Bank’s Financial Prospects Report from January 2025, while some of the findings may already be outdated due to market disruptions, the report provides a solid foundation.
For instance, the report notes that domestic credit to the private sector by banks, as a percentage of GDP, averaged 42% in emerging markets in 2023 compared to 96% in advanced economies. Additionally, bank lending to deposits growth—an indicator of financial system resilience—averaged about 8 percentage points in emerging markets between 2019 and 2023, compared to just 3 percentage points in advanced economies. Globally, growth is expected to hold steady at 2.7% between 2025 and 2026. In the context of rapid credit growth, financial regulators have been urged to monitor and protect against threats to financial stability.
Looking at other sources, an RBI report indicated that household debt in India stood at 42.9% of GDP in 2024. Moreover, data from 34 economies globally showed that new business insolvency cases increased by 33% from 2022 to 2024, including a 12% increase between 2023 and 2024. In terms of insolvency recovery rates, 4% of lower-income countries, 24% of lower-middle-income countries, and 46% of upper-middle-income countries reported recovery rates at or above the global average of 37 cents on the dollar. Notably, fewer than 20% of economies offer robust options to address the early onset of financial distress.
In this context, Menezes highlights two major trends. First, the rising consumer debt levels have spurred greater focus on personal insolvency frameworks. Countries are increasingly aiming to reduce the stigma associated with bankruptcy and allow individuals to make a fresh start. This shift has been supported by tools and frameworks that enable consumers to engage with banks early in the insolvency process. The World Bank has been active in this area, working on tools to assist consumers in negotiating with creditors and supporting fair debt collection practices. Furthermore, in common law countries like India, small unincorporated firms (such as those in the informal sector) are subject to personal insolvency frameworks, making it critical to provide them with tools to navigate financial distress.
Second, Menezes addresses the growing role of technology and digitalization in insolvency processes. Globally, there is an increasing emphasis on data collection and automation, not just within institutions like courts and regulators, but also among insolvency practitioners. India’s digitization of its liquidation process is presented as a leading example of how technology can streamline insolvency proceedings. Additionally, there is an increasing focus on the risks associated with digital assets, such as mobile money funds, and how insolvency practitioners can identify and realize value from these assets. The World Bank is exploring the potential risks digital assets pose in insolvency proceedings.
Menezes also references the World Economic Forum’s “Future of Jobs” report from January 2025, which predicts that the highest-demand skills of the 2020s will include AI, big data, creative thinking, and technological literacy. These skills will increasingly impact professions like insolvency practice, influencing both business failures and the broader market trends.
In conclusion, the landscape of insolvency is evolving, driven by rising consumer debt, the digitalization of processes, and technological advancements. These trends will continue to shape the future of financial distress resolution and insolvency frameworks worldwide.
James H.M. Sprayregen discussed several significant trends in the restructuring and bankruptcy landscape, particularly from a U.S. perspective, following the introduction by Antonia Menezes. He began by acknowledging the academic community, particularly the connection with the National University of Singapore, and encouraged students and members to reach out for further discussions on commercial opportunities and resources available through the program.
Sprayregen then shifted focus to the current trends within restructuring and bankruptcy processes. He emphasized that one of the most notable developments in the U.S. has been the dramatic increase in the cost of going through a restructuring or bankruptcy. This rise in costs has led to shifts in how companies approach these processes, with significant changes in both strategy and conduct. While the increased costs are necessary in some cases, they have undeniably become a larger proportion of the overall financial situation, prompting adjustments in how cases are handled.
He pointed out that the cost issue has driven efforts to formalize and streamline the process. In the U.S., LD (Liability Management) Exercises have emerged as a popular alternative in larger and mid-sized cases. These exercises, designed to manage liabilities without undergoing the full formal bankruptcy process, have become more common in recent years. Sprayregen noted that although these exercises are often informal and less costly, they have been associated with a significant portion of defaults in recent years, even though these defaults typically involve targets or specific liabilities. This trend is gaining traction not just in the U.S., but is also starting to spread to other jurisdictions, though it has not yet seen widespread implementation in countries like India.
Another important development he highlighted was the rise of prepackaged bankruptcy procedures, which focus on speed to reduce costs. While the focus on speed helps keep costs down, Sprayregen cautioned that such quick resolutions might not always allow for the depth and thoroughness of a formal restructuring process, which could be essential in some complex cases.
Sprayregen also pointed out the growth of the Small Business Chapter 11, which was introduced in the U.S. before the COVID-19 pandemic. The chapter was designed to streamline the restructuring process for small businesses, which were previously forced to use the same Chapter 11 process as large corporations. The Small Business Chapter 11 has proven to be much more cost-effective and functional for smaller firms, though it was temporarily sunsetted after the pandemic. Despite this, Sprayregen indicated that a substantial portion of reorganization cases in the U.S. still rely on this process, making it an important tool for small businesses seeking an efficient and affordable solution to financial distress.
Beyond traditional restructuring mechanisms, Sprayregen also highlighted the increasing role of technology disruption in driving financial distress. As industries across the globe continue to undergo digital transformations, companies that fail to adapt to new technological advancements or business models are increasingly finding themselves facing insolvency. This disruption, he noted, is a growing factor that shapes the timing and causes of business failures, making it a significant trend in the restructuring and bankruptcy space.
Another key trend discussed by Sprayregen was jurisdictional competition. He mentioned how companies are increasingly choosing to file for bankruptcy or restructuring in jurisdictions perceived to be more favorable, such as Singapore, the U.S., and the U.K. This competition, he argued, has ultimately proven to be beneficial, driving innovation and improvement in bankruptcy law across borders. COVID-19, in particular, highlighted the need for a more flexible, adaptive approach to restructuring, which has led to the global shift towards rescue and reorganization cultures, as opposed to liquidation-focused cultures.
Finally, Sprayregen emphasized the importance of recognizing each country’s socio-political and economic context when adopting elements of foreign insolvency systems. He pointed out that while the U.K. insolvency system may work well within the U.K., simply transplanting that system into another country without taking local circumstances into account can be problematic. Thus, he underscored the need for sensitivity to these local realities when adapting international restructuring practices.
In conclusion, James H.M. Sprayregen’s insights on the evolving trends in restructuring and bankruptcy underscored the rising costs of these processes, the growing preference for informal and expedited procedures, and the increasing influence of technology disruption. He also highlighted the role of jurisdictional competition in shaping global bankruptcy law and emphasized the importance of adapting systems to fit local contexts.
Dinkar Venkatasubramanian discussed several important trends in the evolving insolvency regime, focusing on changes in the power dynamics, the need for faster and more efficient processes, and ongoing reforms. He emphasized the substantial shift in the insolvency process, particularly the transfer of power from the board of directors to the committee of creditors (CoC). Previously, the board had more control, but with the new system, the CoC has taken charge of managing the business during the insolvency resolution process. This shift allows for more effective management, with the CoC being tasked with finding a resolution within a designated time frame of 180 to 270 days.
From a regulatory perspective, the central bank and other authorities have supported these changes, acknowledging the need for a more streamlined process. However, there remains ongoing debate about how to make the insolvency process more efficient and avoid prolonged legal procedures. Dinkar pointed out that feedback from businesses is crucial for refining the system, and there are active discussions on how to ensure that the process can be completed more quickly, without unnecessary delays.
A key focus of these discussions has been the role of mediation in the insolvency framework. There is an ongoing effort to determine how mediation can be effectively integrated into the process, offering businesses an alternative to the full legal procedure. This would provide a more flexible and collaborative option, potentially saving both time and resources for companies that are able to resolve their issues amicably.
Dinkar also discussed the introduction of a phase one and phase two approach to insolvency cases. Under this new system, a portal has been created where stakeholders can access information and manage cases more efficiently. The approach is designed to expedite the process, offering different pathways depending on the complexity of the case. For smaller businesses, this system allows for faster resolution, which is intended to prevent unnecessary delays.
In India, reforms have been particularly focused on improving the insolvency process for small businesses. Over the past five years, stakeholders have come together to make the process more accessible for small and medium enterprises (SMEs). These reforms have been crucial in allowing SMEs to restructure more effectively without facing exorbitant costs. As a result, restructuring efforts have become more successful and efficient, with stakeholders working collaboratively to resolve issues more effectively.
At a broader level, Dinkar highlighted the growing complexity of financial instruments in distressed situations. The handling of these instruments has become more difficult, and there is an increasing focus on simplifying and clarifying the management of such instruments during insolvency.
Overall, Dinkar concluded that the insolvency regime is undergoing significant changes, particularly in Asia, where there is a strong push for faster, more efficient, and more collaborative insolvency processes. While there have been notable strides in improving the system, Dinkar emphasized that there is still much work to be done, particularly in addressing the complexities of financial instruments and further speeding up the resolution process.
DAY TWO [15th March, 2025]
Session 1: Reimagining BLRC After a Decade
The Bankruptcy Law Reforms Committee was set up in 2014 to recommend reforms in the Indian insolvency law. BLRC submitted this report in 2015, which culminated in the enactment of Insolvency and Bankruptcy Code in 2016. The BLRC was tasked to review the then existing framework and propose a comprehensive framework for the new insolvency law. The state of the economy and many other factors, global and national, have changed significantly since 2014. We now also have the benefits of lessons and experiences of implementation of IBC over almost 9 years. India aspires to become a developed country by 2047. Is it time to have BLRC 2.0 to have developments of last 10 years and look at futuristic vision of the country and recommend reforms in insolvency law to complement national aspirations? This distinguished panel will reflect on the journey of the last close to 9 years and the way forward.
Chair
Shreesha Merla, Hon’ble Former Member Technical, National Company Law Appellate Tribunal
Speakers
Sumant Batra, Insolvency Professional
Anita Shah Akella, Joint Secretary, Ministry of Corporate Affairs, Government of India
Aparna Ravi, Partner, S&R Associates, India
Moderator
Saloni Thakkar, Partner, AZB & Partners, India
Aparna, today’s discussion is about an opportunity you’ve thought about—the objectives you had in mind and how the outcomes may have differed. It’s very possible that some of these objectives were rejected, so they will report back.
Aparna Ravi:
Alright, let’s talk about that. Back in 2014, the financial and regulatory context was different from what it is today. At that time, especially in the banking sector, public sector banks were under significant stress. The existing framework of laws was inadequate to deal with these challenges, particularly when it came to resolving distressed assets. This was the context in which the National Legal Reforms Committee (NRC) began its discussions.
One of the key points was that the existing legal mechanisms, like the Sick Industrial Companies Act (SICA) of 1985, were not effective. These laws allowed companies to hide their assets and avoid meaningful resolution. The process of resolving distressed assets was taking far too long, and the legal framework was unable to keep pace with the challenges faced by the industry.
Context for the NRC’s Objectives:
The NRC had three main objectives when working on the Insolvency and Bankruptcy Code (IBC):
- Timely Resolution: There needed to be a much quicker turnaround in resolving distressed assets.
- Maximizing Asset Value: The aim was to preserve and maximize the value of distressed assets, so that creditors could recover more. This was particularly important for increasing debt financing and encouraging development of bond markets, which were underdeveloped at that time.
- Encouraging Credit Extension: There was a need for a legal framework that would encourage the extension of credit, particularly secured credit.
Features of the Insolvency and Bankruptcy Code (IBC):
When the IBC was finalized, it included several features to meet these objectives:
- The process needed to be fast and efficient, with minimal involvement from the courts. The courts were intended to oversee the process to ensure it was followed, but the resolution itself had to be driven by the market participants.
- Professional involvement was crucial. Experts would play a key role in resolving the distressed assets, rather than leaving the process to bureaucratic or judicial control.
- The resolution process was designed to be flexible, allowing companies to be either restructured or integrated into other firms as necessary. This was to be determined by market participants, not dictated by the law.
- The law also aimed to ensure that creditors were not unduly impacted during the resolution process, especially when it came to securing repayment.
Initial Skepticism and Outcome:
When the IBC first came into effect in 2016, I was skeptical about how it would play out. Would it really work? Could it resolve distressed assets as quickly as promised? But looking at the results now, it has been largely successful. The legal framework has been able to bring in professionals who have implemented the process effectively. The turnaround times have significantly improved compared to what we saw before 2016, and the markets are beginning to show signs of development.
In conclusion, the objectives that were set back in 2014, and later reflected in the IBC, have largely been achieved. The IBC has managed to address the systemic issues in the insolvency process, and it has created a much more structured, professional, and efficient framework for resolving distressed assets.
Shreesha Merla emphasized that a critical component of the transformation in insolvency and bankruptcy laws is the establishment of a robust and efficient framework. She noted that such a framework is essential for fostering intellectual confidence, resolving distressed assets, and ensuring clarity throughout the process.
According to her, the primary objective of the system should focus on creating a creditors-centric approach to insolvency resolution and restructuring. She highlighted the importance of sections like Section 7 and Section 9, which allow applications to initiate insolvency proceedings. These two sections currently constitute 32% of insolvency applications within the system.
However, Shreesha Merla expressed concern that despite the existence of these legal provisions, the outcomes of these operations have often been disappointing. Many cases resolve very little, which calls for a reevaluation of the mechanisms in place. She stressed that the information revolution and a more professional approach are essential for improving the system. Additionally, professionals handling insolvency cases need to be properly trained to deal with these complex matters effectively.
She also pointed out the significant burden on the professionals involved, suggesting that they should be adequately compensated for their work. However, in practice, they often do not receive the fees they deserve, and there is a widespread perception that their contributions are undervalued within the system.
Another major issue she raised was the insufficient number of benches to handle insolvency cases across India. She gave the example of Delhi, which has only one bench, and Chennai, which handles cases from five states and accounts for around 30% of cases. She explained that many cases fail to progress because there are not enough benches to accommodate the volume of cases. She called for more benches, better infrastructure, and trained personnel to improve the system’s capacity.
Shreesha Merla also highlighted a systemic issue she encountered during her time in the insolvency framework: around 95% of staff were outsourced. This led to instability in the workforce, as employees often left for other job opportunities, causing inconsistency in case management and negatively impacting the quality of work.
She went on to discuss the challenges related to the distribution of cases to creditors compared to previous systems, as well as procedural complexities. A significant concern was the absence of a comprehensive law for cross-border insolvency, which complicates matters when dealing with international cases. She called for clearer provisions to address issues involving holding companies, subsidiaries, and service providers.
Another area of concern for Shreesha Merla was the consolidation of cases, especially for complex projects like real estate. She emphasized the need for better coordination and information symmetry to reduce manipulation within the system. She also suggested that insolvency cases involving large or complicated companies should be consolidated for efficiency.
Furthermore, she noted that the current framework tends to elevate operational creditors, which often leads to dissatisfaction among other stakeholders. She believed that this dissatisfaction undermines the overall effectiveness of the process. She proposed that proactive mediation, initiated before the Corporate Insolvency Resolution Process (CIRP), could encourage better settlements and reduce the need for lengthy proceedings.
In conclusion, Shreesha Merla called for substantial improvements to the insolvency framework, particularly in areas such as procedural clarity, addressing cross-border issues, and ensuring adequate training and compensation for professionals. These steps, she argued, are essential for making the insolvency system more effective, efficient, and equitable for all parties involved.
Sumant Batra reflected on the significant transformation in India’s insolvency framework, noting that the initial work and foresight were groundbreaking at the time. He pointed out that the concept was futuristic and was something that countries like Singapore, Australia, and even India were starting to implement. However, back then, the confidence in the insolvency and possession laws was very low due to the previous experiences of users, which had shaken the system.
He acknowledged that the system was in crisis, a crisis that had been concealed for a long time. For years, there had been mounting non-performing loans (NPLs) and financial stress in banks, which were beginning to surface. This was a pivotal moment in India’s economic history.
During this time, Prime Minister Modi visited the United States in his first year after taking office. At a meeting with global institutions like the IMF and the World Bank, he promised to revitalize India’s economy and change how business was conducted in the country. The question posed to him during this visit was about insolvency law and what the exit strategy was for distressed assets. The Prime Minister responded by committing to have the law in place within a year, promising an investment climate that would make India a global leader.
Sumant Batra noted that, following this, the mandate was clear: India needed an insolvency law that could be implemented quickly to address the crisis. The final report on the new law came with a clear directive and a vision of India aspiring to be a global economy, seated at the center of the global financial table. The need for a comprehensive insolvency framework was urgent, especially considering cross-border insolvency challenges.
He mentioned that the initial framework did not include provisions for cross-border insolvency, but due to time constraints, it was included as a compromise, providing cross-border protocols on an individual basis within the Insolvency and Bankruptcy Code (IBC). He also recalled the intense work that went into passing the IBC, highlighting the discussions and compromises that were made along the way.
He reflected on the early days of implementation, describing how the infrastructure for insolvency resolution was built almost from scratch. At the time, there were only limited resources, and many aspects of the system had not yet been fully established. However, the government’s commitment, along with efforts from the team working on the law, eventually led to the creation of world-class infrastructure for insolvency resolution.
Batra praised the work done by the team responsible for building the system, acknowledging their hard work and dedication. He emphasized that much of the success of the Insolvency and Bankruptcy Code (IBC) was due to the collective effort of this team, and he hoped that one day someone would document their contributions and the struggles they overcame. He also recognized that many people who were initially unsung heroes in the process would later be celebrated for their role in shaping what the insolvency system looks like today.
He concluded by reflecting on the progress made, recognizing that although there was a long road ahead, the changes in mindset and approach had been significant. He noted that while statistics on success could be shared, the true impact of the law could only be fully appreciated by looking at the systemic transformation in how insolvency and distressed assets were handled in India.
Session 2: Litigation Funding: Maximising Value of Distressed Assets
In 2016, India introduced the Insolvency and Bankruptcy Code (Code) paving the way for a much-needed modern framework to deal with the insolvency and bankruptcy of corporate entities in India. The Code has moved forward in leaps and bounds in a very short span of time. Due to effective implementation of the Code, green shoots have already emerged. However, further efforts are needed to make price discovery for assets, optimum. There is a need to further deepen market for resolution applications to ensure a vibrant market exists and thus offer competitive process and better price discovery.
Optimisation of price discovery is dependent on many factors. State of secondary market for distressed assets, availability of interim finance and use of litigation funding are amongst the elements that influence price discovery.
Insolvency Law Academy, in collaboration with Burford Capital is undertaking an in-depth comprehensive study on benefits of litigation funding. The study will also suggest solutions to the problems, prepare policy briefs and build awareness.
In this illustrious panel, Dr Sulette Lombard and Mr Sanjeev Pandey will present the results of the study, while the other members will reflect on the presentation.
Presenters
Dr. Sulette Lombard, Associate Professor of Law, UniSA Justice and Society, University of South Australia
Sanjeev Pandey, Part-time Advisor, Centre for Advanced Financial Research and Learning, Reserve Bank of India
Joe Durkin, Senior Vice President, Burford Capital, Dubai
Shweta Bharti, Managing Partner, Hammurabi & Solomon Partners, India
Moderator
S. Badri Narayanan, Chartered Accountant