The Insolvency and Bankruptcy Code (IBC) has managed to bring about a change in the debtor-creditor relationship, with the fear of losing control over one's enterprise nudging thousands of debtors to settle their dues with their creditors so that their company is not pushed into insolvency proceedings, the Economic Survey of 2022-23 has observed.
Data shows, up until H1FY23, as many as 23,417 applications for initiating the corporate insolvency resolution process (CIRP) of corporate debtors having underlying defaults of Rs 7.3 trillion were disposed of before their admission into CIRP.
“One of the far-reaching spill-over effects of the Code has been the behavioural change effectuated by it among debtors. The fear of losing control over the CD upon initiation of CIRP has nudged thousands of debtors to settle their dues even before the initiation of insolvency proceedings,” the Economic Survey noted.
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