Bankruptcy norms for individuals in the works

MUMBAI: The Insolvency and Bankruptcy Board of India (IBBI), the newly-established regulator to reorganise insolvency laws in the country, is working on guidelines for individuals who want to declare bankruptcy and will also allow voluntary liquidation by companies, chairperson Madhusudan Sahoo said in an exclusive interaction with ET.
The IBBI is the nodal agency for implementing the new bankruptcy law under The Insolvency and Bankruptcy Code, 2016, which consolidated and amended laws relating to insolvency of companies, partnership firms and also individuals in a time-bound manner.Laws providing for individual declaration of bankruptcy are currently state-specific, but have been seldom used because of the tedious process associated with it.
“Individual bankruptcy is our next immediate priority. Any citizen will be able to use it. Unlike companies which have homogenous legal structure, individuals are not that homogenous. We really need to think through. It is difficult to give a timeline but it will be faster than you think," Sahoo said.
So far, the IBBI has notified laws for companies which have been declared insolvent.Before the end of the current fiscal, guidelines providing for liquidation of solvent companies, also known as voluntary liquidation, will also be notified. “This will complete the regulatory framework for corporate insolvency and liquidation," Sahoo explained.
IBBI has also created a special entity called Insolvency Professional Entity to facilitate speedy recoveries of high-value loan defaults.
Sahoo said it is likely that the cases may take some time to be disposed because the process is new. “When you start something new, it takes time for stakeholders to understand, particularly creditors who have to trigger the process.They need to have mechanism within the organisation before they trigger the process. It should pick up soon, now that the entire ecosystem and regulatory framework is in place," he said.