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Corporate Insolvency Resolution in India: Lessons from a cross-country comparison

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  • Sengupta, Rajeswari
  • Sharma, Anjali

Abstract

In this paper we analyse the corporate insolvency resolution procedures of India, UK and Singapore within a common framework of well-specified principles. India at present lacks a single, comprehensive law that addresses all aspects of insolvency of a firm. It has a multiple laws, regulations and adjudication fora, each of which have created opportunities for debtor firms to exploit the arbitrage between these to frustrate recovery efforts of creditors. This adversely affets the resolution process, the time to recovery and the value recovered. The importance of a comprehensive, well-functioning insolvency resolution framework has been documented in literature. In India, the Bankruptcy Law Reforms Committee (BLRC) was constituted in 2014 with the objective of proposing a comprehensive framework for resolving the insolvency of firms and individuals. We undertake a comparison of the corporate insolvency resolution framework in UK, Singapore and India, with the underlying motivation to highlight the similarities and differences across the laws, procedures and institutional context of the three countries. The objective of this comparison is to draw lessons for the Indian reform process, in context of the formation of the BLRC. The BLRC has recently proposed an Insolvency and Bankruptcy Bill (IBB) which has been presented in Parliament and is currently being deliberated upon by a Joint Parliamentary Committee.

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  • Sengupta, Rajeswari & Sharma, Anjali, 2016. "Corporate Insolvency Resolution in India: Lessons from a cross-country comparison," MPRA Paper 69130, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:69130
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    References listed on IDEAS

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    Cited by:

    1. Rajeswari Sengupta & Harsh Vardhan, 2023. "Bankruptcy regime change and credit risk premium on corporate bonds: Evidence from the Indian economy," Indira Gandhi Institute of Development Research, Mumbai Working Papers 2023-001, Indira Gandhi Institute of Development Research, Mumbai, India.
    2. M. S. Sahoo & Anuradha Guru, 2020. "Indian Insolvency Law," Vikalpa: The Journal for Decision Makers, , vol. 45(2), pages 69-78, June.

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    More about this item

    Keywords

    Resolving insolvency; Liquidation; Reorganisation; Adjudicator; Loss given default; Recovery rate; Timeliness; Insolvency professional; Information system;
    All these keywords.

    JEL classification:

    • G1 - Financial Economics - - General Financial Markets
    • G2 - Financial Economics - - Financial Institutions and Services
    • G3 - Financial Economics - - Corporate Finance and Governance
    • G33 - Financial Economics - - Corporate Finance and Governance - - - Bankruptcy; Liquidation

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