How does India’s Insolvency and Bankruptcy Code compare to Singapore, the US, and the UK in terms of efficiency, creditor protection, and asset resolution in corporate insolvency?

Question from Sam, How does India’s Insolvency and Bankruptcy Code compare to Singapore, the US, and the UK in terms of efficiency, creditor protection, and asset resolution in corporate insolvency?

Answer from AI:

Overview

The Insolvency and Bankruptcy Code (IBC) of India, the United States’ Chapter 11, the United Kingdom’s Insolvency Act, and Singapore’s Insolvency, Restructuring and Dissolution Act each have their unique features and approaches to corporate insolvency. They differ in terms of efficiency, creditor protection, and asset resolution.

Efficiency

• India: The IBC aims for a resolution within 180 days, extendable by 90 days. However, due to legal complexities, the average resolution time is around 340 days.
• US: Chapter 11 does not have a fixed timeline, and cases can take several years.
• UK: The UK’s process is relatively quick, with most cases resolved within a year.
• Singapore: Singapore’s process is also efficient, with most cases resolved within a year.

Creditor Protection

• India: The IBC gives priority to secured creditors and then operational creditors.
• US: Chapter 11 provides a “debtor in possession” model, where the debtor continues to run the business and has the first chance to propose a reorganization plan.
• UK: The UK system prioritizes secured creditors, followed by preferential creditors, and then unsecured creditors.
• Singapore: Singapore’s law also prioritizes secured creditors, followed by preferential and unsecured creditors.

Asset Resolution

• India: The IBC aims for a resolution plan that maximizes the value of the debtor’s assets.
• US: Chapter 11 focuses on reorganizing the debtor’s business to allow it to continue operations.
• UK: The UK system aims for a fair distribution of assets among creditors.
• Singapore: Singapore’s law also aims for a fair distribution of assets.

Conclusion

While each system has its strengths and weaknesses, they all aim to balance the interests of creditors and debtors and to resolve insolvency in a fair and efficient manner. However, the specifics can vary greatly, and the best approach often depends on the specific circumstances of the insolvency. For personalized advice, it is recommended to consult with a legal professional.

For more information, you can refer to the Insolvency and Bankruptcy Board of India, the US Courts on Bankruptcy, the UK Insolvency Service, and the Singapore Ministry of Law’s Insolvency Office.