NCLT is a resolution and not a recovery mechanism: Bahram N Vakil
he newly-formed committee to review amendments to the Insolvency and Bankruptcy Code may have to look to fix contentious tax issues including stamp duty, said Bahram N Vakil , founding partner of law firm AZB & Partners. In an interview with Reena Zachariah and MC Govardhana Rangan , Vakil, who was one of the authors of the IBC, said the government is aware of these concerns and the idea is to have a ‘going concern’. Edited excerpts:
We are talking about amendments to the Insolvencyand Bankruptcy Code (IBC) within a year. What does it indicate?
The one year of IBC so far has been good. Many questions were asked on how it will work, especially regarding speed, because the time-frame was tight — 180 to 270 days maximum. How will the NCLT, the appellate tribunal, the judiciary cope with this? There have been so many cases — 450 cases. That itself tells you that it’s gone well. In a majority of cases, they have kept to the stringent timelines at all levels — the NCLTs, appellate tribunals, high courts, and in several instances, even the Supreme Court. All of them have moved swiftly. So, we should give credit where it is due.
But there are complaints about the quality of insolvency professionals…
This is a new profession. There was no such thing as insolvency professional. Now, I’m sure in one year, we will have 1,000-1,500 new professionals. People were also worried whether these professionals have the bandwidth and competence. Some of those questions have been answered, but some remain. Coming to the law, it is a learning process for everyone. If you look at any other country — Europe, the US, the UK had several amendments in the last three decades. The US had over 300-400 amendments! You can’t leave a law static in the present environment. As practical difficulties and roadblocks come up, you have to be dynamic and step in. In that sense, the government has done a very good job. The ordinance caters to our specific requirements.
What does the government’s bankruptcy ordinance achieve?
There is a sense of urgency in the 12 largest accounts that form 25% of our NPAs. The bids (for the companies) are due by month-end. The main thing the ordinance conveys is, if you are a defaulter or have violated laws, you can’t be part of the resolution process. We are looking for a good management to take over.
As carried in ET