In the previous five years since the Insolvency and Bankruptcy Code went into effect, 4541 corporate insolvency resolution processes have started. Of them, 1264 have reached the 270-day mark.
Delays in the CIRP have serious consequences since, in addition to essentially paralyzing the corporate debtor when a moratorium is imposed, creditors also suffer as the value of the corporate debtor declines over time, increasing the risk of liquidation. Since resolution applicants constantly modifying their proposals, which results in excessive delays, the existing process of requesting resolution plans has been plagued by delays in choosing a resolution plan.
This paper makes the case that the Committee of Creditors should be given the option to adopt a resolution plan through alternative procedures in order to improve the current situation. The “Swiss Challenge Model” is one such technique that is used to great success across countries in the event of bankruptcy procedures and to get bids in infrastructure projects in India.
This essay addresses the necessity for the SCM, the SCM process that may be used in accordance with the Code, and if such a procedure would be legal under the current legal system. Additionally, an analysis of the relevant NCLT observations has been conducted. Finally, this study offers ideas and proposals for enhancing the effectiveness of CIRP and the Code.
