Management of Business Reengineering and Re-Structuring Under Insolvency and Bankruptcy Code: Lessons From Indian Experience

International Journal of Management (IJM)
Volume 12, Issue 7, July 2021, pp. 10-22, Article ID: IJM_12_07_002
Available online at https://iaeme.com/Home/issue/IJM?Volume=12&Issue=7
ISSN Print: 0976-6502 and ISSN Online: 0976-6510
https://doi.org/10.34218/IJM.12.7.2021.002
© IAEME Publication Scopus Indexed
MANAGEMENT OF BUSINESS RE-

ENGINEERING AND RE-STRUCTURING
UNDER INSOLVENCY AND BANKRUPTCY
CODE: LESSONS FROM INDIAN EXPERIENCE
CA. Dr. Binoy Joy Kattadiyil 1, Prof. Dr. Bakhtiyor Anvarovich Islamov 2
1
Managing Director, ICSI Insolvency Professional Agency of Insolvency &
Bankruptcy Board of India
2
Professor of International Economics Сhair,
G.V. Plekhanov Russian Economic University Branch in Tashkent, Russia
ABSTRACT
IBC is the second most crucial reform in the legal setting of India. It is because IBC
is not only making India emphatically powerful in the field of the legal environment but
also provides a new identification and recognition at the global platform economically.
The Insolvency and Bankruptcy Code, 2016 is the bankruptcy law of India which seeks
to consolidate the existing framework by creating a single law for insolvency and
bankruptcy. The paper studies distinguish features and the legal framework of the code.
The study is descriptive in nature. In line with that, the paper also presents the impact
of Insolvency and Bankruptcy code on macro environment of India
Key words: IBC 2016, Macro Environment, Insolvency, Bankruptcy, Legal
Environment of India, Liquidation
Cite this Article: Binoy Joy Kattadiyil and Bakhtiyor Anvarovich Islamov,
Management of Business Re-Engineering and Re-Structuring under Insolvency and
Bankruptcy Code: Lessons from Indian Experience, International Journal of
Management (IJM), 12(7), 2021, pp. 10-22.
https://iaeme.com/Home/issue/IJM?Volume=12&Issue=7
1. INTRODUCTORY REMARKS
It is well-known that in the market economy Corporate Sector plays a crucial role in the
Economic Development of a nation. In the modern economic system, the entrepreneur perceives
the business environment (consisting of economic and non-economic factors) and bears all the
risks of uncertainties. The growth of the corporate sector is dependent upon the Banking Sector.
A sound banking system leads to economic empowerment, growth and development by
ensuring the efficient, smooth and effective flow of funds. The banks run the recovery process
of the Non-Performing Assets (NPAs) and the non-performing amount of the loans or advances
brings a dent in the balance sheet of the banks. The banking, corporate and industrial sectors
https://iaeme.com/Home/journal/IJM 10 editor@iaeme.com
Management of Business Re-engineering and Re-structuring under Insolvency and Bankruptcy
Code: Lessons from Indian Experience
are the major sufferers of NPAs as they erode the value of assets. The lessons from Foreign
countries, especially Indian Experience, that made remarkable progress can help Uzbekistan
and other Transforming and Developing Economies in laying a strong base of Insolvency Law
on which robust edifice of a well-built economy can be made.
2. INDIAN EXPERIENCE
An Economy is an organised system, which encircles all the economic activities of a country
or a geographical area. These inter-related economic activities are production, distribution and
consumption of goods and services. The key players of an economy are banks, businesses,
Government, households and individuals. The economy is the provider of employment and
means to earn livelihood. It converts the scarce resources into goods and services to satisfy the
myriad requirements of the people. The resources are limited but their demand is limitless and
this is how it leads to the scarcity of resources, which becomes economic problem. In a healthy
economy, there is optimal allocation and frugal use of the scarce resources. When we use the
resources well, then the economy of that country grows. And the economy depends upon the
exchange of money for the goods and services. The development of economy is indispensable
for the survival and development of people and the growth of the economy is dependent on the
economic activities.
Economic development means the improvement in economic and social welfare of a nation.
There are varied social, economical, political and environmental factors that affect the
economic development of a nation and all these factors depend upon the other four main factors
which are – capital, human resource, natural resources and technology. Highly developed
nations focus on these four core areas for its development. The other secondary factors (which
depend upon the four main factors) are namely, infrastructure level, barriers to trade, political
stability, increased savings and investments and education. The four main factors are explained
as under–
a. Physical Capital – Capital is utilized by the businesses and industries for the production
process. The production process starts with savings. Savings also generate investments. The
developed nations have acknowledged the strategic role of capital in raising the production
level. Hence, capital is the core of economic development and it leads to further production of
wealth. The entrepreneurs (key players of the economic development of a nation) secure funds
from the banking system for their project in the form of credit and use the investments for
expansion and growth, for creating new and better products and for providing jobs. Credit
creation is also an important component of the economic development. The banks play a crucial
role in the financial system of an economy. They allocate funds from savers to borrowers in an
efficient manner. They are the repositories of savings of the community (the depositors are
given interests for their deposits) and purveyors of credit for the activities (borrowers pay
interests to bank for the loan taken) in an economy.
The rate of GNPAs in the SCBs of the Indian Banking System was rising over the years
from 2.2 per cent of the Gross advances in 2007-08 to 11.2 per cent in 2017-18 (Chart 3.2
below). But since the implementation of IBC, maximum possible recoveries are made on a
faster pace. Therefore, the rate of NPAs fell to 9.1 per cent in 2018-19 and further fell to
8.5% 2019-20. As per the RBI data, the Gross NPAs of Scheduled Commercial Banks (SCBs)
reached INR 10.40 lakh crore as on March 31, 2018 from INR 3.23 lakh crore as on March 31,
2015. The Gross NPAs of SCBs declined to INR 9.36 lakh crore as on March 31, 2019.i
This reduction in the amount of Gross NPAs is certainly accredited to the time bound and
efficient resolution process under the IBC.
Binoy Joy Kattadiyil and Bakhtiyor Anvarovich Islamov
Chart 3.2 - GNPAs (in % of Total Advances)

0.12
0.1 11.2%
0.08 9.3% 9.1%
8.5%
0.06 7.5%
0.04
4.3%
0.02 3.8%
3.1% 3.2%
2.2% 2.3% 2.6% 2.5%
0
Source: RBI, Various reports
Table 3.2 Status of CIRPs as on March 31, 2019

Status of CIRPs No. of CIRPs
Admitted 1858
Closed on Appeal / Review/ Settled 152
Closed by Withdrawal under section 12A 91
Closed by Resolution 94
Closed by Liquidation 378
Ongoing CIRP 1143
> 270 days 362
> 180 days < 270 days 186
> 90 days < 180 days 247
< 90 days 348
Source : IBBI Quarterly Newsletter, January-March 2019
The realized value of the claims was 43 per cent of the total admitted claims as against 23%
under earlier regimes (Table 3.2). These figures of CIRPs were realized in just about two years
since the implementation of IBC. The NPAs create the problem of scarcity of funds with the
banks as they have detrimental impact on the profitability of the banks. Banks are the strong
pillar of a nation. So, to resolve this problem the IBC was implemented in India in 2016 as a
legislative measure to maximize the value of assets and decrease the stressed assets.
b. Human Resources – The labour force enhances the efficiency of the sectors and is
responsible for innovation and so it is the major input in research and development (R&D).
There have been many studies which point out that the rise in labour force has a noteworthy
impact on the developmental level of an economy.
c. Natural Resources – In the less developed and developing nations the natural resources are
unutilized, under-utilized or mis-utilized and hence they remain backward. Some nations which
are poor in natural resources can be rich in natural resources at a later time because they discover
new methods for the known resources. The most prominent example is Japan which is deficient
in natural resources but it discovered new use for the limited resources.
d. Technology – The improvements in the technological level helps a nation in making new
discoveries, innovations and in finding new ways of production techniques. With the help of
new technologies, the same amount of labour will be more efficient and productive and this
results in the economic development at lower costs.
The nations which have recognized the importance of these four factors have higher growth
rates and improved standards of living. The other determinants which influence the economic
development of a country are:
Foreign Trade and Investments – Foreign Investment comprises of Foreign Direct
Investment (FDI)ii and Foreign Institutional Investment (FII)iii. For the developing nations like
India, FDI is the major economic source for the development. The foreign countries take the
benefits of cheap labour and changing business environment of India and so, they invest in
India.
The United Nations Conference on Trade and Development (UNCTAD) has acknowledged
the consolidated FDI Policy of India as the explicit foreign investment strategies. It also
recognized foreign investment as important element of industrial development strategy.ivThe
World Investment Report 2020 of the UNCTAD ranked India as the 9th largest recipient of
FDI in 2019, with 51 billion dollars of inflows during the year which was an increase from
the 42 billion dollars of FDI received in 2018. India was given 12th position in the World
Investment Report 2019. It said that India was among the top 5 host economies for FDI in
the “developing Asia” region and India is also the biggest FDI host in South Asia and FDI
inflows into India have been on a long term growth trend.v This is the second time that India
continued to be in the list of top 10 economies of the world. This is due to the remarkable
insolvency reform efforts taken in India and 63rd rank of India (on EoDB index) in the Doing
Business Report 2020 of the World Bank. Foreign trade has proved its utility to the nations
which have set up industries in a short period of time. Hence, a developing nation needs to focus
on becoming self reliant in capital requirements.
Political Stability – Political stability is the most important factor for encouraging the foreign
investors and to invest in the developing nations. A sign of instability increases the personal
and economic risk of investing in the developing countries. The prolonged civil unrest or the
military conflict causes the investments to dry up.
These factors influence the growth opportunities within a country and help in the economic
development of a country in the long run and increase the productive potential of an economy.
The problem of NPAs also has to be solved simultaneously, so that the banking and corporate
sectors flourish which will eventually result in the free flow of capital without any impediments.
A well built structure and mechanism is necessary for the easy entry and exit of firms in the
economic system along with the determined authorities and court for the proper, effective and
efficient implementation of laws. The IBC is one such example of economic and legal reform
in India which is proving to be fruitful by serving its purpose of codification in its nascent stage
of just three years of implementation. This legislation has not only improved the domestic
economic condition within the boundaries of India but also attracted foreign investors to invest
and enhanced foreign trade in India.
The IMF is supporting the reform of the Insolvency system of many countries through
IMF-supported economic programs because such reforms have impacted the economic and
financial systems of the nations. The Insolvency laws bring about the broadening and
deepening of the capital markets. It improves the corporate and banking sectors in an economy
and thus it helps in capital formation. The developing nations will have an accelerated pace of
growth if they save high ratio of their income with the objective of increasing the level of
investment. Economists assert that the lack and inadequacy of capital is the main hurdle to
economic growth and the developmental plan will succeed on the adequate supply of capital.
Hence, to achieve economic progress a certain minimum level of capital has to be realized and
to accomplish this task there should be effective recovery of bad loans and other problems
related with bad loans.
The International Monetary Fund (IMF) states that the Real GDP Growth of India (in
its 2020 Datamapper) has grown by 1.9% and has classified India as an Emerging Market
and Developing Economy.vi The World Economic Outlook (WEO) Report of IMF of October
2019, “has estimated India’s economy to become the fifth largest in the world, as measured
using GDP at current US$ prices, moving past United Kingdom and France. The size of the
economy is estimated at US$ 2.9 trillion in 2019”.vii
Table 3.1 Top 10 Economies in the world in terms of GDP at current US$ trillion
Sl. No. Country 2017 2018 2019 (E) Change in position
1 United States 19.5 20.6 21.4 in 2019
-
2 China 12.1 13.4 14.1 -
3 Japan 4.9 5.0 5.2 -
4 Germany 3.7 4.0 3.9 -
5 India 2.7 2.7 2.9 ▲
6 United Kingdom 2.6 2.8 2.7 ▼
7 France 2.6 2.8 2.7 ▼
8 Italy 2.0 2.1 2.0 -
9 Brazil 2.1 1.9 1.8 -
10 Korea 1.6 1.7 1.6 -
Data Source: World Economic Outlook, October 2019 database
Notes: E: IMF’s estimate;
▲indicates improvement in rank:
▼ indicates drop in rank and
- indicates unchanged rank.
GDP can act as an accurate barometer for the business activities and highlight the
comparative strengths for business activities of the economies.
From the year 2008, the rate of NPAs was swiftly rising in India which affected the credit
market of the economy. According to a report of RBI, the GNPAs ratio of the SCBs rose from
2.4 per cent to 11.5 per cent in March 2018.1 The NPAs contracted the money stock of the banks
which may ultimately lead to economic slowdown.
The 2008 financial crisis, also known as global financial crisis highlighted the need of
efficient insolvency and bankruptcy regimes for liquidating unviable businesses and
reorganising the viable ones. A research of the World Bank (after the financial crisis of 2008)
came up with the three key findings. These findings are - “Firstly, reforms that improve
insolvency regimes have a real effect on credit. Secondly, new mechanisms to encourage debt
restructuring or reorganization decrease the duration and cost of bankruptcy proceedings and
1
Reserve Bank of India, Financial Stability Report, Various issues
reduce the failure rate of insolvent firms. Finally, evidence from high income countries
suggests that reforms to individual bankruptcy laws can increase household credit, which may
also benefit entrepreneurs”.2
Altogether the research suggested that effective reforms in insolvency regimes,
improve economic activity. The World Bank mentioned that, “Countries that implement sound
insolvency regimes reduce the cost of credit and increase overall economic stability. In contrast,
in countries with weak insolvency regimes, struggling companies and their assets often languish
unproductively, limiting creditor recovery”.3 The countries with well-ordered and prominent
insolvency procedures are continuously looking at ways to improve their debt resolution
systems and hence, make their nations more resilient.
The problem of rising NPAs is resolved by the Insolvency reform in India in the form of
the Insolvency and Bankruptcy Code, 2016 (IBC). The comprehensive insolvency and
bankruptcy framework has caused changes in the willingness of the banks and lenders (to lend
funds) and entrepreneurs and companies to take risk, therefore, it influences a number of
economic indicators such as job preservation, employment creation, credit growth and
entrepreneurship and these indicators in turn, impact the overall economic growth of the Indian
economy.
The IBC was enacted at the time when Indian banking industry was going through a very
difficult phase, was over burdened with huge piles of NPAs and there was bad credit perspective
in the country. The Financial Stability Report of June, 2016 released by Reserve Bank of India
(RBI) confirms the fact that not all was well in the health of Indian banks. Before the
codification of IBC, insolvency cases were dealt with by High Courts, District Courts, Company
Law Board, Lok Adalats, Debt Recovery Tribunals (DRTs) and Board for Industrial and
Financial Reconstruction (BIFR) which gave rise to complexity, undue delay in the process,
over lapping of decisions and lack of clarity over jurisdictions.
The IBC is heralded as an epoch-making legislation in the Indian history. The gap in
the insolvency framework in India is filled to an extent by way of the IBC and its subsequent
amendments. It envisages a market mechanism to allow free exit of firms, rescue firms and
closure of firms in financial distress. The insolvency reform aims to resolve the issues with
more effective provisions, provide for timely re-organisation of businesses, preserve value of
the assets, protect the rights of the creditors, balance the interests of all stakeholders and enables
a timely and efficient resolution of re-engineering & re-structuring and establishes a framework
for cross border insolvency. The Code has designated the National Company Law Tribunal
(NCLT) as the adjudicating authority for the corporate persons. It is quite common that
whenever a new legislation is adopted, the practical results are seen after several years because
it takes time for the lawyers, judges and insolvency professionals to get accustomed to it.
It is an evolving law and has teething problems. The amendments are being made as soon
as lacunae are found. The Government of India, the adjudicating authorities and the Supreme
Court are incessantly working on it.
2
LeoraKlapper, “Saving Viable Businesses : the effect of insolvency reform”, The World Bank (September 2011),
https://www.doingbusiness.org/en/research/resolving-insolvency
3
Antonia Menezes, “Debt Resolution and Business exit: Insolvency reform for credit, entrepreneurship and
growth”, The World Bank (July 2014), https://www.doingbusiness.org/en/research/resolving-insolvency
The IBC is comparatively a pristine law and has never seen India before 2016. Therefore, a
thorough research study is indispensable to explore IBC as an important tool in the growth of
the Indian Economy and to assess the outcomes, effectiveness and monitor performance of the
IBC in the development of Indian Economy via, business re-engineering and restructuring tools.
The article deeply analyses the historical leap of India’s ranking on the EoDB index of the
World Bank and how this economic reform has made India’s economic standing stronger
globally. The present study will help the researchers and the Government of India in making
IBC more powerful for the growth of the Indian Economy.
The Degree of Knowledge of the Problem - Many researchers have done research in the field
of banking industry as it has always been a priority for the country but there are quite a few
articles in the field NPAs on the banking and corporate sector in India. Review of existing
literature is done to understand and study the theoretical framework relating to the inefficient
and ineffective insolvency law as the prime cause of the rise in the non-performing assets in
India which leads to poor credit flow, investments, savings, closure of the viable businesses and
running the unviable businesses continuously in losses and to enhance the present level of
understanding in the area of corporate insolvency and bankruptcy.4 Few studies have been
conducted by the World Bank and IMF which show the effect of insolvency laws on the
economic development of a country.
Literature review has been carried out broadly on the basis of books, research papers
published in journals, online publihed papers, reports of the Government, reports of various
4
Cirmizi, Elena and Klapper, Leora F. and Uttamchandani, Mahesh, “The Challenges of Bankruptcy Reform”,
World Bank Policy Research Working Paper, (October 1, 2010), Peng, Mike W., Yasuhiro Yamakawa and Seung-
Hyun Lee, “Bankruptcy Laws and Entrepreneur- Friendliness”, Vol 34(3), Entrepreneurship Theory and Practice,
517-530 (May 2010), Lee, Seung-Hyun, Yasuhiro Yamakawa, Mike W. Peng and Jay B. Barney, “How do
bankruptcy laws affect entrepreneurship development all around the world?” Vol 26(5) Journal of Business
Venturing, 505-520 (September 2011), Muge Adalat McGowan and Dan Andrews, “Insolvency Regimes and
Productivity Growth: A Framework for Analysis” Organization for Economic Co-operation and Development
(OECD) Economics Department Working Paper No 1309 (July 01, 2016), Jack Jason, “A Missing Variable: The
impact of cross-border insolvency laws on Foreign Direct Investment”, Minnesota Journal of International Law,
287 (2018), MSR Krishna Prasad Rao, “A study on the ease of doing business in India: Problems and Prospects”,
Vol 8(3), International Journal of Management, IT & Training (March 2018), Anjali Singh, K.K. Jaiswal, “Ease
of Doing Business in India: A vision of make in India”, Vol 63(1), Economic Affairs, 129-135 (March 2018), Dr.
Vijeta Banwari, “Ease of Doing Business in India – Road Ahead”, Vol 6(1(1)), International Journal of
Management Studies, (January 2019), PRS Legislative Research, “Report Summary Economic Survey 2019-
20”,Ministry of Finance, “Key Highlights of Economic Survey 2019-20”, Srijan Anant, Aayushi Mishra, “A Study
of Insolvency And Bankruptcy Code And Its Impact On Macro Environment Of India”, Vol 7(3), International
Journal of Engineering Development and Research , 28-35 (2019), Esther Tensingh and Dr. Suresha B., “A study
on the impact of the Insolvency and Bankruptcy Code, 2016 on Indian Commercial Banks”, Vol 6(6), Journal of
Emerging Technologies and Innovative Research, 68-75 (June 2019), Nimit Gupta, Nimsha Desai and Evanshi
Garg, “Impact of Insolvency and Bankruptcy Code on India’s Macro Economy focussing on Indian Commercial
Banks”, Vol 22 Supremo Amicus, 2020, Schou-Zibell and Madhur, “Regulatory reforms for improving the business
environment in selected Asian Economies- How monitoring and comparative benchmarking can provide incentive
for reform”, Asian Development Bank (2010),
committees, reports of the organizations such as, RBI, World Bank 5, IMF6, United Nations,
UNCTAD7, etc. The impact of the IBC is studied by analyzing – (i) NPA level, (ii) rate of FDI
and (iii) recovery rate of stressed assets in the Indian economy both prior to and after the
implementation of the Code. This has helped the researcher to indentify gaps and to determine
the objectives of the study. The research work will add new knowledge to the banking and IBC
literatures which will help the readers to comprehend IBC and NPAs in a better way.
The relationship of the research work with the Republic of Uzbekistan and the plans of
research, where the dissertation was performed – The mighty insolvency reform has
nonetheless shown distinct positive changes in the insolvency framework in India. It facilitates
reorganizing a viable but financially distressed business. After the implementation of IBC, the
recovery rates under various regimes and IBC are compared and it can be distinctly seen that
the IBC has all alone accounted for 42.5% of the recovery of NPAs in 2018-19. After the
implementation of IBC the creditors are making recovery at a much faster and higher rate of
44.70% and have realized maximum value of assets. The realization of the existing assets is
made at 191% of the realizable value of the assets through the corporate insolvency resolution
process.8
The exceptional progress made within 3 years in the rankings on the parameters of EoDB
and Resolving Insolvency indexes is laudable and credited to the IBC. India’s overall ranking
in 2016 was 130th out of 190 economies in the World Bank’s Index on the ease of doing business
(EoDB) and 136th on the ease of resolving Insolvencies.9 In 2018, India jumped to 100th position
in the EoDB index and 103rd position in ease of resolving insolvency index.10
Now as per World Bank’s EoDB Report 2020, India stands at 63rd position in the EoDB
index and 52nd position in the index of ease of resolving insolvency. The World Bank also stated
that now India takes 1.6 years to resolve insolvency cases. According to RBI, GNPAs declined
to 9.3% in March 2019 and it was also estimated that GNPAs would go down to 8% by March
5
Klapper, Leora, “Saving Viable Businesses: the effect of insolvency reform”, Vol 1 World Bank Other
Operational Studies, (September 2011), Mario Gamboa-Cavazos, Frank Schneider, “Bankruptcy as a legal
process”, The World Bank Group (2007), https://papers.ssrn.com/sol3/papers.cfm?abstract_id=979614, Menzes,
Antonia Preciosa, “Debt Resolution and Business Exit: Insolvency reform for credit, entrepreneurship and
growth”, Vol 1 World Bank Journal of Public Policy (September 2014), Menzes, Antonia Preciosa, “Debt
Resolution and Business Exit: Insolvency reform for credit, entrepreneurship and growth”, Vol 1 World Bank
Journal of Public Policy (September 2014), World Bank group Flagship Report, Doing Business 2016 – Measuring
Regulatory Quality and Efficiency, 13th Edition, World Bank group Flagship Report, Doing Business 2020 –
Comparing Business Regulation in 190 Economies , 17th Edition
6
IMF DATAMAPPER 2020, Jose Garrido, “Insolvency and Enforcement Reforms in Italy”, Vol 16(134)
International Monetary Fund Working Paper (July 2016)
7
UNCTAD, “World Investment Report 2018 : Investments and New Industrial Policies” (2018) available at,
“World Investment Report 2019 : Special Economic Zones”
8
IBBI Quarterly Newsletters, April-June 2020, Vol 15
9
World Bank Flagship Report, “Doing Business 2016 – Measuring Regulatory Quality and Efficiency”, 13th Ed
10
World Bank Flagship Report, “Doing Business 2018Reforming to Create Jobs- Comparing Business Regulation
for Domestic Firms in 190 Economies”, 15th Ed
2020.11India received FDI worth USD 42 Billion in 2018.12 In 2019, India was the ninth largest
recipient of FDI and attracted USD 49 Billion of FDI in 2019.13The IBC has made India’s
economic front emphatically powerful and hence, there is rise in the rate of FDI inflows because
it has assured security to the foreign investors by recovering maximum value of the assets. In
some fresh cases the creditors have realized 100% of their invested amount and hence has
created history in India.
Though the current bankruptcy law in Uzbekistan is new as it was initially adopted in early
1990s but it has improved drastically over the last decades. The insolvency framework of
Uzbekistan was upgraded significantly by redrafting the law several times and is still
undergoing changes that are being introduced as a part of its economic reforms. The natural
strengths of Uzbekistan are vitiated by weaknesses in the policy and administrative regime
governing business. These weaknesses are major obstacles to accelerate FDI. A crucial key
area to improve FDI inflows would be to strengthen the insolvency and bankruptcy laws
in the country, to provide easy exit routes to the failing and unviable businesses and to
provide safety net options that will enhance foreign investments by encouraging foreign
investors.
The unparalleled results are evident from the Indian ecosystem wherein FDI inflows in
India exponentially rose after the advent of the Insolvency and Bankruptcy Code, 2016 as it
provided for smaller stricter timelines, easy exit routes without undue delays and wearisome
litigation time.
Uzbekistan is a country that has the potential to become one of the robust economies
in the post-Soviet area and to become the largest economy in Central Asia. Amongst the
ten factors that determine the ranking of Uzbekistan, ‘resolving insolvency’ remains the
only factor to not have shown any improvement or contributed to the EoDB (is at 100th
position in “resolving insolvencies”) as per Doing Business Report, 2020. The rise in the
rate of NPAs every year in Uzbekistan can be combated through reforms in restructuring
loans via insolvency laws and protection to lenders as well as borrowers. Therefore, for
developing a sound insolvency framework the insolvency and bankruptcy laws should
seek rehabilitation of the corporate debtor, time bound resolution and recovery of stressed
assets or liquidation. The Insolvency reform and this research work would not only benefit the
Uzbekistan’s economy for the purpose of improving its EoDB ranking, but will also be a step
towards future liberalization and growth.
The Purpose of the Work – The purpose of this research work is to empirically find out the
outcomes and implications of the management of business re-engineering and restructuring
tools under the insolvency and bankruptcy reform with special reference to Economic
Development of India. The research work aims to help Uzbekistan and also the Under-
Developed and Developing Economies in laying a strong base of Insolvency Law on which
robust edifice of a well built economy can be made.
11
Reserve Bank of India, Financial Stability Report, Various issues
UNCTAD, “World Investment Report 2018 : Investments and New Industrial Policies” (2018)
12
UNCTAD, “World Investment Report 2019 : Special Economic Zones”

13
Research Objectives – The objectives of the research work are:

• To examine the management and implications of Business Re-engineering and
Restructuring under the insolvency reform and its role in the Economic Development of
India (in the reduction of NPAs, increase of FDI and improvement in EoDB ranking).
• To juxtapose the state of Indian economy that existed prior to the enactment of IBC with
the state existing post its implementation (through the parameters such as- Recoveries made
under IBC, FDI, EoDB and NPA).
• To compare the outcomes of the Re-engineering and Restructuring strategies under IBC on
the stakeholders and the nation with that of Liquidation.
• To study and assess the overall outcomes and implications of the Code on the development
of the Indian economy.
Research Object– The research object is the transformation of the Indian Economy because of
the proper management of the business re-engineering and restructuring tools under the
insolvency reform (the IBC) by studying its outcomes and implications on the Indian Economy.
Research Subject – The research subjects are :
• Business re-engineering and restructuring tools of the IBC,
• India’s EoDB ranking,
• NPA rate,
• FDI inflows into India,
• Recovery rate of stressed assets, and
• Analysis of cases resolved through Re-engineering and Restructuring schemes under the
insolvency reform.
Research Method -The research on the present study is a Doctrinal Research involving review
of the earlier insolvency and bankruptcy laws that existed before the advent of IBC in India.
The present study is Empirical and Economic Policy Research. The researcher has used Paired
sample t-test to determine the impact of the re-engineering and restructuring tools under the
IBC on the economic development of India. Exploratory Design is chosen for this study.
Secondary sources of data collection are used. Data is collected from various sources, such as,
newspapers, books, publications and reports of Government of India, RBI, Insolvency and
Bankruptcy Board of India (IBBI), Ministry of Corporate Affairs (MCA), Press Information
Bureau (PIB), Securities and Exchange Board of India (SEBI), Planning Commission, PRS
Legislative Research, World Bank Reports, United Nations Organisation (UNO) Reports,
United Nations Conference on Trade and Development (UNCTAD), IMF and other official
publications, Journals, Working Papers, Internet sources and Research papers.
The period of data used in the study is from FY 2016-17 to the FY 2019-20. The data available
prior to or at the beginning of FY 2016-17 is also used to further the research.
Scientific Novelty- The scientific novelty aspects of this research study are:
Undertaking standard insolvency practices (SIPs) relating to CIRP under the Code, Undertaking
preparation of White Paper on various topics to be submitted to IBBI, Holding workshops,
training sessions, webinars for the members, Grievance redressal and disciplinary action,
Building a system of monitoring and evaluation to kits members, Understanding and preparing
forms and formats, Preparing research Papers and Setting up corporate governance
infrastructure in IPA.
Practical Research Results– After careful study of the available literature the researcher found
that the insolvency and bankruptcy legislation and procedures have a strong impact on the
development of an economy as they have a great and direct impact on the rate of NPAs, FDI
inflows and EoDB ranking of an economy. These are the major factors which are responsible
for the economic development of a nation. IBC was introduced in 2016 in India and the
insolvency cases were introduced from January 2017 and within 3 years of its implementation
positive results were seen in India. The rate of NPAs started to decline, maximum amount was
being realized from the stressed assets, the sick viable businesses started to revive within a
shorter period of time through the business re-engineering and restructuring tools under the
resolution plans of the IBC, amount of FDI inflows into India rose at a faster pace, debtors’
perspective towards creditors changed and India made historical leap on the EoDB ranking of
the World Bank.
So, the factors - the rate of NPAs, FDI inflows, recovery of the stressed assets and EoDB
ranking of an economy are taken in the research study for empirically analyzing their impact
on the Indian Economy.
Reliability of the Research Results - The expediency of the research methods and
methodology used in this study is determined by the fact that the database used is taken from
official sources. Conclusions, suggestions and recommendations are used to ensure the
economic security of the Republic of Uzbekistan and India.
Scientific and Practical Significance of the Research Results– The scientific significance of
the research results is explained by the fact that the developed conclusions and proposals serve
to improve the scientific and methodological base of the management of the business re-
engineering and restructuring tools under the resolution plan of the insolvency law.
The practical significance of the research results is explained by the fact that the
recommendations can be used in the development of insolvency legislation and framework for
enhancing the recovery rate of stressed assets, thereby reducing the rate of NPAs and this will
ensure economic development of the Republic of Uzbekistan.
Implementation of Research Results – The implementation aspect of this research study
mentioned are the Notification (under Sec. 4 of IBC relating to Pre-Packaged Insolvency
Resolution Process, Ministry of Corporate Affairs as per Gazette of India dt. 9th April 2021) the
Central Government specified ten lakh rupees as the minimum amount of default for the matters
relating to the pre-packaged insolvency resolution process of corporate debtor under Chapter
III-A of the Code, The Securities and Exchange Board of India (Appointment of Administrator
and Procedure for Refunding to the Investors) Regulations, 2018, [Regulations] provide for
appointment of Insolvency Professionals (IPs) as Administrators for the purposes specified
therein, to further the objective of increasing transparency, expertise and move towards the goal
of good corporate governance to be achieved by the IPAs, the IBBI implemented the Insolvency
and Bankruptcy Board of India (Model Bye-Laws and Governing Board of Insolvency
Professional Agencies) (Amendment) Regulations, 2021 through which the requirement of
eligibility and qualification of a shareholder director was added as was requirement for a self
assessment by the IPA and need to appoint a compliance officer, the IBBI Amended
Regulations on Liquidation and Voluntary Liquidation process under IBC, dt. 5th August 2020
to the Regulations provides that the corporate person may replace the liquidator by appointing
another insolvency professional as liquidator by a resolution of members or partners, or
contributories, the Central Government in consultation with the Reserve Bank of India notified
the insolvency resolution and liquidation proceedings of the Non-banking finance companies
(which include housing finance companies) with asset size of Rs.500 crore or more as per last
audited balance sheet being regulated by Reserve Bank of India (RBI) shall be undertaken in
accordance with the provisions of the IBC read with the Insolvency and Bankruptcy (Insolvency
and Liquidation Proceedings of Financial Service Providers and Application to Adjudicating

Authority) Rules, 2019 (in this notification referred to as the ‘Rules’) and the applicable
Regulations and the Regulations for Insolvency Resolution and Bankruptcy Proceedings of
Personal Guarantors to Corporate Debtors were notified (The Insolvency and Bankruptcy Board
of India (Insolvency Resolution Process for Personal Guarantors to Corporate Debtors)
Regulations, 2019,The Insolvency and Bankruptcy Board of India (Bankruptcy Process for
Personal Guarantors to Corporate Debtors) Regulations, 2019).
Concluding Remarks. This research study will help the Governments in framing effective and
efficient insolvency and bankruptcy rules and laws, policy makers in making recommendations
and policies, is of interest to the research community and researchers in making further studies
related with this area.
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i
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vii
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Finance,https://www.indiabudget.gov.in/economicsurvey/doc/vol2chapter/echap01_vol2.pdf

Management of Business Reengineering and Re-Structuring Under Insolvency and Bankruptcy Code: Lessons From Indian Experience

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MANAGEMENT OF BUSINESS RE-

Chart 3.2 - GNPAs (in % of Total Advances)

Source: RBI, Various reports

Table 3.2 Status of CIRPs as on March 31, 2019

Source : IBBI Quarterly Newsletter, January-March 2019

UNCTAD, “World Investment Report 2019 : Special Economic Zones”

Research Objectives – The objectives of the research work are:

and Liquidation Proceedings of Financial Service Providers and Application to Adjudicating

[2] Ministry of Corporate Affairs, Publications, accessed at

[5] Doing Business Report, World Bank 2020, accessed at

[6] Country Context Paper, World Bank 2020 Report, accessed at

[9] Statistics from Central Bank of the Republic of Uzbekistan accessed at

[11] Financial Development Policies in Uzbekistan, accessed at

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