New Delhi: The insolvency professionals should engage greater use of technology and keep working for revival of companies under the Insolvency and Bankruptcy Code (IBC), said Dr Ms Mukulita Vijayawargiya, WTM (Research and Regulation Wing), IBBI in a ASSOCHAM webinar on ‘Covid19 relief-Insolvency and Bankruptcy Code,’ held ‘Tuesday.
Dr Vijayawargiya said that while the Covid-19 has affected all the businesses and corporates, it has had a much larger impact on individuals and the common man and thus involves, larger public interest, as such policies should now be made keeping the larger interest of public in mind.
She added that processes like mediation, pre-pack, fresh start, individual insolvency need to engage with technology and online processes so that even if there is lockdown, we can start with and help the society, the individuals and the corporates to mitigate the impact of Covid-19.
She suggested that process of mediation can be adopted for settling the claims, instead of filing applications before the NCLT and waiting for the orders thereby resulting into delaying the process.
She also said, “All professionals have to learn the process and technique of mediation and be mediators so that the insolvency process can be completed in 100 days as against 180 days. If we adopt pre-pack, it can be completed in 80 days also.”
Dr Vijayawargiya stated that the lockdown period is a good time for insolvency professionals to complete the tasks which can be performed without depending on others as there is online filing of forms as well to keep the IBBI updated about the undergoing insolvency cases in the NCLT.
Besides, professionals can list out the processes that do not require physical meeting of people but can be carried out via video conferencing and other mechanisms as Covid-19 needs to be looked at as a kind of natural calamity and we may face such natural calamities in future as well in different forms.
The top IBBI official further said, “We need to re-design our work culture, office processes, some amendments may be required in the procedural laws because this is the procedure which regulates the implementation of substantive laws also. So in future CPC and CRPC would be required to be conducted for arguments through video conferencing, Supreme Court is doing it in urgent cases but it may become a regular feature.”
Talking about the lockdown she also said that IBBI has from time-to-time made endeavour to streamline the regulations to address the inadequacies, shortcomings or any challenges which the market is facing and as such recently the CIRP and liquidation regulations were amended to just clarify that the period of lockdown would not be counted for the purpose of completion of the timelines.
Further, IBBI has also clarified to the professionals that they need not worry about the timelines and no disciplinary action will be taken because of the lockdown and they can carry on their function without any stress or worries.
Sharing his views in the webinar, the ASSOCHAM National Council on IBC chairman, Mr Sumant Batra said that disruption caused in IBC by Covid-19 should be used as an opportunity to think out of the box and reinvent.
“The main priority of insolvency professionals should be to focus on two things – stabilising the operations to pre-lockdown stage and prepare a strategy to reduce costs of management and keep high accountability in this area. This is imperative to stop the valuations from sliding and prevent liquidation,” said Mr Batra.
He added, “The Creditors should apply objectivity in considering requests made by resolution applicants to revisit the resolution plans. If lenders show rigidity the courts will be constrained to intervene.”
Mr Anil Goel, co-chairman, suggested that government should come out with a bailout package based on the actual losses suffered by industry and enterprises on account of Covid-19.
“The losses may be assessed by banks and finally approved by a high-level nodal agency set up by government and a good part of interest and principal should be considered as subsidy in case the business is revived and loan is repaid on time,” said Mr Goel.
ASSOCHAM’s secretary general, Mr Deepak Sood also shared his thoughts on the issue and said, “Recent proactive steps taken by the government like raising threshold limit from Rs one lakh to Rs one crore will go a long way in allaying the woes of industry especially the much critical micro, small and medium enterprise (MSME) sector thereby leading to mitigation of Covid-19 impact on the businesses.”