Finance Research Group

IGIDR Roundtable on Recovery and Resolution mechanisms for Corporate Debt

28th August, 2014
Boardroom I, Grand Hyatt, Santacruz, Mumbai

A firm is deemed to be insolvent or in a state of financial distress if it is unable to pay its debts. The bankruptcy laws of a country resolve such problems, enabling rehabilitation of distressed firms that are financially viable and liquidation of those that are not. In India, there is no single law that deals with corporate insolvency. The legal framework for dealing with insolvent firms included provisions for winding up firms in the Companies Act, 1956, and the Sick Industrial Companies Act, 1985, for the rehabilitation of sick industrial companies. Neither were successful in resolving corporate insolvency, and the rapidly growing non-performing assets of banks has been a persistent concern for policy makers. Later, certain laws and mechanisms were put in place in order to strengthen the recovery rights of banks. These were:

  • Recovery of Debts due to Banks and Financial Institutions (RDDBFI) Act, 1993: lead to the setting up of the debt recovery tribunals (DRT) and the debt recovery appellate tribunals (DRAT).
  • Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act, 2002: enabled the creation of asset reconstruction companies (ARC).
  • Corporate Debt restructuring (CDR) mechanism: a voluntary process for restructuring the debt of viable companies outside the legal framework of insolvency resolution.

This roundtable proposes to discuss the performance of these three mechanisms of recovery and resolution and their effectiveness in dealing with the problem of corporate insolvency.

Agenda

10:00 - 10:15 An Overview
Susan Thomas, IGIDR FRG[presentation]
10:15 - 10:45 Gaps in the efficiency of DRTs
Renuka Sane, ISI, DELHI[presentation]
10:45 - 11:15 How has SARFAESI and the ARCs helped resolve bank NPAs
Anjali Sharma, IGIDR FRG and Sanjay Jain, ARCIL[presentation]
11:15 - 11:45 The CDR process
Saugata Bhattacharya, AXIS BANK and Susan Thomas, IGIDR FRG[presentation 1][presentation 2]
11:15 - 11:45
Chairperson		 Panel Discussion
Ajay Shah, NIPFP
Sanjay Banerji, UNIVERSITY OF NOTTINGHAM
Debanshu Mukherjee, VIDHI CENTER
Badri Narayan, THIRD EYE CAPITAL LTD.
Bahram Vakil, AZB PARTNERS
Rajeev Yadav, IFAPL
13:00 - 14:00 Lunch