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Building an institution of insolvency practitioners in India

Author

Listed:
  • Anirudh Burman

    (Indira Gandhi Institute of Development Research)

  • Shubho Roy

    (Indira Gandhi Institute of Development Research)

Abstract

A good insolvency and bankruptcy regime ensures the prompt and fair resolution of financial distress. This paper identifies the rationale for creating a cadre of insolvency professionals who can play an important role in the process of rescuing, restructuring or liquidating a distressed firm. It proposes that the primary objective of creating a regulated cadre of professionals is to protect consumers i.e. the distressed firm and creditors of such firms. The primary task of regulating such professionals should be left to Self Regulatory Organisations (SROs). The state should, in turn, regulate these SROs to ensure that they are discharging their functions effectively. The paper cites evidence from other areas where SROs have played an effective regulatory role in protecting consumers. Finally, the paper ends by providing prescriptions on the regulatory framework for insolvency professionals and the SROs that would regulate them.

Suggested Citation

  • Anirudh Burman & Shubho Roy, 2015. "Building an institution of insolvency practitioners in India," Indira Gandhi Institute of Development Research, Mumbai Working Papers 2015-033, Indira Gandhi Institute of Development Research, Mumbai, India.
  • Handle: RePEc:ind:igiwpp:2015-033
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    File URL: http://www.igidr.ac.in/pdf/publication/WP-2015-033.pdf
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    References listed on IDEAS

    as
    1. Peter M. DeMarzo & Michael J. Fishman & Kathleen M. Hagerty, 2005. "Self-Regulation and Government Oversight," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 72(3), pages 687-706.
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    More about this item

    Keywords

    Insolvency resolution; bankruptcy resolution; specialised professionals; regulation; consumer protection;
    All these keywords.

    JEL classification:

    • G33 - Financial Economics - - Corporate Finance and Governance - - - Bankruptcy; Liquidation
    • K22 - Law and Economics - - Regulation and Business Law - - - Business and Securities Law
    • K23 - Law and Economics - - Regulation and Business Law - - - Regulated Industries and Administrative Law

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