Evaluating the Effectiveness of Insolvency Resolution Processes under India’s Insolvency and Bankruptcy Law

Abstract

The Insolvency and Bankruptcy Code (IBC), 2016, represents one of the most significant legal and economic reforms in India aimed at addressing the long-standing challenges of corporate insolvency, financial distress, and asset recovery. This study evaluates the effectiveness of insolvency resolution processes under the IBC by examining its structural framework, implementation experiences, and actual outcomes across various sectors. The Code’s emphasis on time-bound resolution, creditor empowerment, and market-driven mechanisms has contributed to a more disciplined credit environment and improved recovery rates compared to the pre-IBC era. However, despite these achievements, the resolution framework continues to face substantial challenges including delays in case disposal, frequent litigation, capacity constraints within the National Company Law Tribunal (NCLT), limited bidder interest in certain industries, and inconsistencies in recovery values. The study also highlights sector-specific complexities, operational limitations of insolvency professionals, and ambiguities arising from evolving judicial interpretations. Recent reforms and policy developments, including amendments to the IBC and initiatives to strengthen institutional infrastructure, demonstrate ongoing efforts to enhance efficiency and transparency. Overall, the study concludes that while the IBC has significantly transformed India’s insolvency landscape, continuous refinement and capacity building are essential to ensure the long-term sustainability and effectiveness of insolvency resolution processes.