81 companies want to be declared bankrupt

News81 companies want to be declared bankrupt

Within a year of the National Company Law Tribunal (NCLT) starting operations from June 2016, a total of 81 companies which had taken loans to the tune of Rs 14,260 crore have pleaded with the body seeking permission to be declared bankrupt under the Insolvency and Bankruptcy Code 2016.

According to the NCLT, 81 cases have been registered in all till 20 May this year under the Insolvency and Bankruptcy Code 2016, out which 32 defaulting companies wilfully approached the NCLT. The rest of the companies were asked by the NCLT to present their case for not being able to repay the debt. 

As per the insolvency code, the NCLT will constitute a debt repayment committee for assessment of the loan and repayment capacity of these companies. In case they are not capable of repaying the loan, these companies will be declared bankrupt, a senior NCLT official said.

“For failing to repay bank loan, the NCLT has already suspended the operations of 11 companies owing almost Rs 3,900 crore in debt. The NCLT has asked these companies to repay the loan amount as they don’t satisfy the criterion for declaring them bankrupt,” the senior official quoted above said.

There are 25,000 pending cases in the Company Law Board (CLB), the Board for Industrial & Financial Reconstruction (BIFR), and the various Debts Recovery Tribunals (DRTs). All these cases are expected to be transferred to the NCLT. The CLB, BIFR and the DRTs will eventually merge with the NCLT. 

However, experts say that the NCLT may not be able to clear the huge burden of pending cases with the limited resources it has. “With just 11 benches and 62 judicial and technical members, the NCLT will not be able to handle the mountain of pending cases,” Devesh Sachdev, CEO of Fusion Microfinance, a consultancy firm, said. “The NCLT, set up under the Insolvency and Bankruptcy Code 2016, may take at least five years to fully clear the 25,000 pending cases,” Sachdev added. However, the NCLT has already said that it will open more branches to deal with pending cases within the time limit. As per the Insolvency and Bankruptcy Code 2016, the NCLT has to decide on the cases within 180 days of a case being filed, with a provision to extend the deadline by 90 days.  The Code was passed in May 2016 and subsequently, a four-member Insolvency and Bankruptcy Board of India was constituted under M.S. Sahoo, former whole-time member at capital market regulator Securities and Exchange Board of India.

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