The government has introduced significant reforms to the corporate insolvency process. These changes are designed to streamline the process, promote business recovery, and resolve insolvency cases more efficiently.

Key Changes in the Legislation

• Establishing a pre-packaged insolvency resolution framework, enabling distressed companies to negotiate and finalize a restructuring plan with creditors before initiating formal insolvency proceedings.
• Strengthening the role and regulations governing insolvency professionals to ensure they are qualified and act in the best interests of all stakeholders.
• Introducing measures aimed at protecting the interests of creditors while simultaneously providing viable businesses an opportunity for revival.

These reforms represent a significant step forward in Indian corporate law, aiming to bring the insolvency regime in line with international best practices. The focus is not just on liquidating assets, but on genuinely attempting to rescue businesses that are struggling but viable.

Experts believe that the inclusion of pre-packaged insolvency options will significantly reduce the time and cost associated with the formal resolution process, which has traditionally been quite lengthy in India. This should improve the recovery rate for creditors and provide a more predictable environment for investors.