Parliamentary Panel Advocates for Transparent Tracking System in Insolvency Resolution Cases

The Parliamentary panel has urged the government to establish a transparent system for tracking the time taken in resolving insolvency cases. This recommendation comes amid reports of prolonged delays in some cases. The panel also suggested creating a central online portal for the direct submission of resolution plans to streamline the process.

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The Insolvency and Bankruptcy Code (IBC) aims for a timely and market-driven resolution of stressed assets. Despite improvements, delays persist due to various challenges. The Parliamentary Standing Committee on Finance highlighted issues like conflicts of interest and lack of transparency as ongoing obstacles to the Code's full effectiveness.

Focus on Timely Resolution

To address these concerns, the panel recommended implementing a system to track case resolution times, especially where statutory timelines are breached. A tabular format showing processing times, violations, and delays could aid in better policy-making, according to the committee.

In its report on the ministry's Demands for Grants for 2025-26, presented in Parliament, the panel also urged the corporate affairs ministry to facilitate direct submission of resolution plans via a central online portal. This would help maintain confidentiality and prevent undue advantages for involved parties.

Ensuring Fair Representation

The panel also called for a review of the Committee of Creditors (CoC) structure to ensure operational creditors are adequately represented. Often, their interests are overlooked in the insolvency resolution process. The CoC plays a crucial role in this process.

Additionally, the panel recommended establishing an Environment, Social, and Governance (ESG) oversight body within the ministry. This body would monitor ESG disclosures, ensure compliance with reporting standards, and introduce penalties for greenwashing.

Addressing Accountability

The panel emphasized that complaints against resolution professionals should be addressed promptly to ensure accountability. This step is crucial in maintaining trust and efficiency in the insolvency process.

These recommendations aim to enhance the effectiveness of both the IBC and ESG frameworks by addressing existing challenges and ensuring fair representation and accountability throughout the process.