INSUBCONTINENT EXCLUSIVE:
It will take about six months just to get a new insolvency case admitted to court
India's revamped bankruptcy process is in full swing and investors from Blackstone Group LP to Oaktree Capital Group LLC are salivating over
an estimated $210 billion of stressed assets that are up for grabs
But the courtrooms handling the thousands of bankruptcies are lacking a key component: Judges.Ten benches with a combined 26 judges and
technical staff are hearing more than 2,500 insolvency cases, the latest official data show
Based on the workload a year ago, researchers estimated India needs about 80 benches over five years
That estimate is starting to look conservative, as tighter rules introduced by the banking regulator in February are poised to tip hordes of
additional deadbeat borrowers into bankruptcy.A streamlined bankruptcy process is crucial for Prime Minister Narendra Modi's attempts to
come to grips with a simmering banking crisis that's sucking energy out of India's economy
Any failure to resolve the shortage of judges also has implications for large global investors who are lining up to chase bargains across
industries ranging from steel to cement."The National Company Law Tribunal appears to be understaffed and ill-equipped to deal with the
increasing volume," said Punit Dutt Tyagi, Delhi-based executive partner at Lakshmikumaran Sridharan Attorneys, referring to the court
system set up to handle bankruptcies
"This situation is unlikely to get better with time."Oaktree is following India's insolvency process and says may open a local office "under
the right circumstancesThe NCLT was set up in June 2016 and gained full powers in January 2017, when India's new bankruptcy laws took effect
last week became the first large defaulter to complete the revamped bankruptcy process, missing the initial 180-day deadline for resolution
but just about meeting the 270-day outer limit.On Feb
12, the banking regulator ordered banks to take defaulters straight to the NCLT if they can't come up with a repayment plan within six
That will likely accelerate the buildup of cases in court, which stood at 9,073 on Jan
31, including 2,511 instances of insolvency, 1,630 cases of merger and amalgamation, and 4,932 cases under other sections of the Companies
Act, lawmakers were told last month.Moreover, the bankruptcy process risks getting complicated by challenges to the court's orders
Renaissance Steel, one of the companies that bid to buy Electrosteel under the bankruptcy process, plans to appeal the decision to award
Electrosteel to Vedanta Ltd., the Economic Times reported this week, citing an official it didn't identify.The accumulation of bankruptcy
cases means that it sometimes takes about six months just to get a new insolvency case admitted to court, said Shardul S
Shroff, executive chairman of Delhi-based law firm Shardul Amarchand Mangaldas Co."These courts don't have time to hear company law related
matters as they say the insolvency cases are taking up all their time," Shroff added
"In the absence of more judges it will be difficult for them to deal with the workload.(This story has not been edited by
TheIndianSubcontinent staff and is auto-generated from a syndicated feed.)
