Extension beyond 270 days: New attempt at resolution

Strict timelines distinguish the Insolvency and Bankruptcy Code, 2016, from previous insolvency regimes. The code prescribes a 180-day period for completion of the corporate insolvency resolution process (CIRP), which can be extended to 270 days, and does not provide for the extension of time beyond 270 days. These timelines were laid down to ensure timely resolution of a corporate debtor but, on the flip side, it can be argued that such stringent timelines may jeopardize the resolution of a viable company and force it to go into liquidation save for the intervention of adjudicating authorities.

In order to ensure compliance with these timelines, the legislature and the Insolvency and Bankruptcy Board of India (IBBI) have been taking various steps. The IBBI has prescribed a model timeline, which the resolution professional (RP) is to follow while conducting the CIRP.

A new clause inserted in section 5 by the Insolvency and Bankruptcy Code (Second Amendment) Act, 2018 (Second Amendment Act), provides that where the interim resolution professional (IRP) is not appointed in the order admitting the application, the 180-day period will commence from the date on which the IRP is appointed. This has been done with a view to ensure that time taken for appointment of the IRP is not included in the 180 days and the entire period is at the IRP’s disposal to protect the interests of all stakeholders.

SNG & Partners has offices in Delhi, Mumbai and Singapore. Aniket Sawant is an associate and Medha Unadkat is a legal consultant.