By laksh5382 
Chairman Ravi Mital said India should move for a specific ‘group insolvency’ framework as part of the Insolvency and Bankruptcy Code (IBC). Insolvency and Bankruptcy Board of India (IBBI),
“There is a need to impose group bankruptcy. Despite this it is NCLT “There are several cases going on based on the powers they have,” Mital said at an international conference jointly organized by INSOL India and IBBI in the capital on Saturday.
Group insolvency refers to the insolvency resolution process dealing with a group of companies that are linked to each other through ownership, control or common business operations. It aims to address situations where financial distress in one entity affects the entire group, requiring a coordinated approach to resolution.
At present, group insolvency is not explicitly provided for in the initial framework of the IBC. However, since India’s corporate landscape often involves complex group structures, the need for a mechanism to handle group insolvency has become increasingly apparent.
While the IBC currently lacks explicit provisions for group insolvency, efforts are underway to unify a framework through recommendations, judicial interpretations and evolving practices.
judicial precedents
Indian courts, particularly the National Company Law Tribunal (NCLT), have recognized the need for group insolvency in some cases. In cases like Videocon Group insolvency, NCLT allowed integration of 13 Videocon group companies into a single process. The Tribunal acknowledged the interconnected financial and operational structures, considering it essential for effective resolution.
The Insolvency Law Committee (ILC) Report (2020) recognized the importance of addressing group insolvency. It suggested introducing a framework for procedural coordination between group entities and developing rules for voluntary and involuntary consolidation, where appropriate.
The IBC is also considering aligning its framework with international practices, such as the UNCITRAL Model Law on Enterprise Group Insolvency, to address global groups with entities in multiple jurisdictions.
Meanwhile, Mittal appreciated the work being done by the NCLT and said that last year the tribunal had approved 270 resolution plans. He said IBBI is keen to reduce the workload of NCLT and is also trying to introduce lender-led resolution process in the country.
delay in ibc admission
Mittal highlighted that all borrowers want to repay and they do not want to enter IBC. This, he said, is because admission to IBC takes time, sometimes more than a year.
“We are definitely taking time for the admission process, but that is because the admission process in India is 99 per cent adversarial, whereas in developed economies it is 99 per cent non-adversarial,” he said.
He also said that admission to IBC does not just involve admission to IBC. “This includes removal of promoters from a company. Entry is not just entry. The admission is appointing a resolution professional (RP), giving him the authority to take over the company,” said Mital.
The IBBI chief said that in the last two years the IBBI has made rules that will reduce litigation or clarify things. “We are a regulator and we understand that we need to simplify things. If we make things simple, it will be easier for everyone to work.”
Mital also said that IBBI has shortlisted 18 suggestions from last month’s meeting. He said that it will be taken to its logical conclusion in the next few months.