The Standing Committee on Finance under the chairmanship of BJP MP Bhartruhari Mahtab has directed the Ministry of Corporate Affairs (MCA) to implement a direct submission system for resolution plans through a central online portal. This move aims to ensure confidentiality in the submission process, preventing any undue advantage for certain parties, the Committee stated in its latest report on MCA’s demands for grants for 2025-26.
The absence of a mechanism to guarantee the confidential and fair submission of resolution plans has been a key concern plaguing the Insolvency and Bankruptcy Code (IBC) process. To address this issue, the Committee has included this recommendation as part of a four-point action plan to improve IBC outcomes in the country.
Challenges in the IBC process
The Panel acknowledged the significant progress made by the IBC in streamlining the resolution of distressed corporate assets in India. However, it noted that persistent challenges continue to hinder the full effectiveness of the Code. These challenges include Conflicts of Interest; Lack of Transparency; Delays in Resolution; Weak Framework for Monitoring Resolution Professionals (RPs) and Limited Representation of Operational Creditors in the Committee of Creditors (CoC).
Four-point action plan
To improve the efficiency and fairness of the IBC process, the Committee has recommended a four-point action plan. These are Implementation of a Direct Submission System for Resolution Plans; Enhancing the Role and Accountability of Resolution Professionals; Transparent Monitoring of Case Resolution Timelines and Review of the Committee of Creditors’ (CoC) Structure.
The MCA should introduce a central online portal where resolution plans can be submitted directly, the Parliamentary Panel said. This would ensure that sensitive information remains confidential, preventing any undue advantage for specific parties and improving fairness in the process, it added.
The Committee also recommended strengthening the professional standards for RPs through rigorous certification requirements, specialised training, and independent performance reviews. Additionally, complaints against RPs should be addressed promptly to uphold accountability and ensure that they act in the best interests of all stakeholders, the Panel said.
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The Committee emphasised the need for a structured mechanism to track the time taken for resolving insolvency cases. It suggested implementing a tabular system to monitor cases, highlighting delays, violations of statutory timelines, and processing inefficiencies. This data-driven approach would assist policymakers in making informed decisions to improve resolution speed and efficiency, it added.
The Committee also recommended revisiting the structure of the CoC to ensure that operational creditors receive adequate representation. Currently, operational creditors—who often play a critical role in a company’s functioning—are not given sufficient voice in the resolution process. Addressing this imbalance would lead to more equitable and efficient resolutions, the Panel said.
Commenting on the Parliamentary Panel’s suggestions, Daizy Chawla, Managing Partner – S&A Law Offices, said this is the 9th year of Insolvency & Bankruptcy Code 2016.
However, IBC is still not able to make much of a mark in solving the problem of stressed assets and is used more like a recovery tool.
“Unless the procedure and timeline inculcated in the Code is made compulsory like in some other statues the recommendations (of various committees set up to address the concerns) will remain ineffective”, Chawla said.
