{"id":35983,"date":"2018-11-01T12:50:58","date_gmt":"2018-11-01T07:20:58","guid":{"rendered":"https:\/\/blog.forumias.com\/?p=35983"},"modified":"2018-11-01T12:50:58","modified_gmt":"2018-11-01T07:20:58","slug":"a-greater-market-role-in-bankruptcy-process","status":"publish","type":"post","link":"https:\/\/forumias.com\/blog\/a-greater-market-role-in-bankruptcy-process\/","title":{"rendered":"A greater market role in bankruptcy process\u00a0:"},"content":{"rendered":"<p><a href=\"http:\/\/www.livemint.com\/Opinion\/6J6Sy19yZpgIcEwjsVFLDM\/A-greater-market-role-in-bankruptcy-process.html\"><span style=\"font-weight: 400;\">A greater market role in bankruptcy process\u00a0<\/span><\/a><span style=\"font-weight: 400;\">: <\/span><\/p>\n<p><span style=\"font-weight: 400;\">(Live Mint, Editorial)<\/span> <span style=\"font-weight: 400;\">(A smart expenditure for bankruptcy process)<\/span><\/p>\n<p><b>Context :<\/b><\/p>\n<ul>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">To tackle private investment in India, the government should come up with a bankruptcy law which would help businesses exit sooner and capital to be reassigned faster to productive firms, thereby improving economic output and employment.<\/span><\/li>\n<\/ul>\n<p><b>Introduction :<\/b><\/p>\n<ul>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">India\u2019s new bankruptcy law, circulated last year, while marking a positive departure from the old and fragmented system that existed earlier, is far from ideal.<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">This new law provides for appointing an insolvency professional (IP) to conduct the process. <\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">But research has shown that this approach leads to higher bankruptcy costs.<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">It also leaves too much discretion in the hands of the IP who, in India\u2019s case, is likely to have much less knowledge and experience in this domain.<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Furthermore, the National Company Law Tribunal (NCLT), the adjudicating authority for all corporate default cases, would be tasked with resolving as many as 25,000 bankruptcy cases over and above other corporate cases.<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">And it may take more than seven years for the NCLT to clear these many cases.<\/span><\/li>\n<\/ul>\n<p><b>The proposed solution :<\/b><\/p>\n<ul>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Recently economists have proposed a radical, market-friendly approach to the resolution of the bankruptcy process. <\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">According to the proposal, a much better bankruptcy system would be one that encourages decentralization, reduces the role of courts or insolvency professionals, and allows for a greater role for the markets. <\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">In this system, the courts would only have a supervisory role. <\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">This would do away with the need to establish and maintain specialized bankruptcy courts, insolvency professional agencies, or even experts for operating the firm. <\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">It would also remove the scope for discretionary decisions by IPs. <\/span><\/li>\n<\/ul>\n<p><b>Suggestion :<\/b><\/p>\n<ul>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">For India to improve its rankings in the doing business index, it is not enough to simply have a bankruptcy code in place.<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">The code must be strong, decentralized, less costly, inclusive and speedy.<\/span><\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"<p>A greater market role in bankruptcy process\u00a0: (Live Mint, Editorial) (A smart expenditure for bankruptcy process) Context : To tackle private investment in India, the government should come up with a bankruptcy law which would help businesses exit sooner and capital to be reassigned faster to productive firms, thereby improving economic output and employment. Introduction&hellip; <a class=\"more-link\" href=\"https:\/\/forumias.com\/blog\/a-greater-market-role-in-bankruptcy-process\/\">Continue reading <span class=\"screen-reader-text\">A greater market role in bankruptcy process\u00a0:<\/span><\/a><\/p>\n","protected":false},"author":61,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"categories":[555],"tags":[],"class_list":["post-35983","post","type-post","status-publish","format-standard","hentry","category-test-1","entry"],"jetpack_featured_media_url":"","views":{"total":0,"cached_at":"","cached_date":1704658473},"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/35983","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/users\/61"}],"replies":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/comments?post=35983"}],"version-history":[{"count":0,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/35983\/revisions"}],"wp:attachment":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media?parent=35983"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/categories?post=35983"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/tags?post=35983"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}