Unlocking Value: IBBI’s Call for Voluntary Insolvency in India

IBBI chief Ravi Mital advocates for increased use of voluntary insolvency processes in India to boost company productivity. Highlighting the Rs 3.6 lakh crore recovery under the Insolvency and Bankruptcy Code, he underscores the need to emulate developed nations where voluntary insolvency is more common.

India's companies must step up in utilizing the voluntary insolvency process to boost productivity, according to Ravi Mital, the chief of the Insolvency and Bankruptcy Board of India (IBBI). Speaking at a conference in the capital, organized by Assocham and CPA Australia, Mital pointed out that while the Insolvency and Bankruptcy Code (IBC) has facilitated the recovery of Rs 3.6 lakh crore by creditors since its inception in 2016, voluntary applications remain low compared to creditor-initiated cases.

Mital stressed the advantage of companies initiating their insolvency processes, noting that such approaches yield maximum value and minimize value destruction. He highlighted that in developed countries like the US, most insolvency processes are voluntary, contrasting it with India, where creditors often initiate cases, turning the process adversarial.

During the summit, CPA Australia and Assocham reinforced their commitment to industry collaboration by signing a Memorandum of Understanding to enhance capacity building and develop future-ready skills. This partnership emphasizes nurturing innovation and career growth in line with global best practices, as stated by CPA Australia's CEO, Chris Freeland AM.

(With inputs from agencies.)