Folks may know that I am in India as a Fulbright-Nehru Research Scholar. If you didn't, go here.
My research project is the implementation of India's new (as of 2016) Insolvency and Bankruptcy Code (IBC). The nature of our (and by "our" I mean me and colleague Risham Garg) empirical research is qualitative. In other words, we are not so much looking to crunch hard data but to identify and analyze the perceptions of the professionals working in and administering the IBC.
For those who want the data I wholeheartedly recommend The Leap Blog. Folks at the National Institute of Finance and Public Policy publish the The Leap Blog. The NIPFP graciously hosted me for an afternoon a while back that was very informative. Plus, many of the folks who work at the NIPFP are economists by training and so they are qualified to deal with the data.
Speaking of data, go here to read one of the recent posts on The Leap Blog: "The Indian bankruptcy reform: old defaults vs. recent ones". Researchers Renuka Sane of NIPFP and Rajeshwari Sengupta of another think tank, IGIDR, reached a conclusion that disappointed me.
But first the backstory. India had a legal system to address corporate insolvency even before the IBC. The Sick Industrial Companies Act (SICA) was by universal acclaim an inefficient system. SICA cases for insolvent corporate debtors would languish for years before frequently ending in a liquidation of assets. The IBC replaced SICA and was expressly designed to resolve cases "in a time-bound manner" and tilt the process in favor of restructuring over liquidation. Also, most existing SICA cases were transferred to be administered under the IBC.
Restructuring in a time-bound manner was everyone's hope but those hopes have not come to fruition. IBC proceedings are also taking far longer to resolve than the statutory maximum of 270 days. Nonetheless, one might have hoped that the statistical average was biased by the residuum of old SICA cases clogging the new and improved IBC process. Perhaps the "pure" IBC cases were speeding through the system.
It turns out they're not. As The Leap Blog reports, mean and median times for new proceedings are as slow as the old SICA cases:
My research project is the implementation of India's new (as of 2016) Insolvency and Bankruptcy Code (IBC). The nature of our (and by "our" I mean me and colleague Risham Garg) empirical research is qualitative. In other words, we are not so much looking to crunch hard data but to identify and analyze the perceptions of the professionals working in and administering the IBC.
For those who want the data I wholeheartedly recommend The Leap Blog. Folks at the National Institute of Finance and Public Policy publish the The Leap Blog. The NIPFP graciously hosted me for an afternoon a while back that was very informative. Plus, many of the folks who work at the NIPFP are economists by training and so they are qualified to deal with the data.
Speaking of data, go here to read one of the recent posts on The Leap Blog: "The Indian bankruptcy reform: old defaults vs. recent ones". Researchers Renuka Sane of NIPFP and Rajeshwari Sengupta of another think tank, IGIDR, reached a conclusion that disappointed me.
But first the backstory. India had a legal system to address corporate insolvency even before the IBC. The Sick Industrial Companies Act (SICA) was by universal acclaim an inefficient system. SICA cases for insolvent corporate debtors would languish for years before frequently ending in a liquidation of assets. The IBC replaced SICA and was expressly designed to resolve cases "in a time-bound manner" and tilt the process in favor of restructuring over liquidation. Also, most existing SICA cases were transferred to be administered under the IBC.
Restructuring in a time-bound manner was everyone's hope but those hopes have not come to fruition. IBC proceedings are also taking far longer to resolve than the statutory maximum of 270 days. Nonetheless, one might have hoped that the statistical average was biased by the residuum of old SICA cases clogging the new and improved IBC process. Perhaps the "pure" IBC cases were speeding through the system.
It turns out they're not. As The Leap Blog reports, mean and median times for new proceedings are as slow as the old SICA cases:
We find that a larger proportion of the old, legacy cases were liquidated. Median recovery rates were lower for the old cases that did go through a resolution compared to the more recent cases. However, there was no difference in time taken to complete the IRP process. (Emphasis added.)You should read the entire linked piece for the authors' caveats but in any event this news is indeed disappointing.
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