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The NCLT benches have become the weak link of the Insolvency and Bankruptcy Code (IBC) There have been inordinate delays at the NCLT, mainly due to inconsistent application of law, lack of institutional capacity and the tendency to entertain frivolous cases by promoters and disgruntled creditors Supreme Court has conclusively ruled on contentious issues under the IBC such as supremacy of commercial wisdom of financial creditors, subordinate status of operational creditors and bar on promoter participation.  Yet the NCLT continues to entertain petitions questioning settled positions.  It is commonplace to find contrarian orders passed on emotive grounds bereft of legal reasoning which defy statutory provisions and the Supreme Court’s orders Erroneous decisions are set aside at the NCLAT and the Supreme Court but it needlessly waste time  If the NCLT is taking unreasonably long to approve a plan then it must submit a report to the NCLAT, justifying the delay. Failure to ref...

After the Asian financial crisis, China set up dedicated bad banks for each of its big four state-owned commercial banks. These bad banks were meant to acquire non-performing loans (NPLs) from those banks and resolve them within 10 years. In 2009, their tenure was extended indefinitely. In 2012, China permitted the establishment of one local bad bank per province. In 2016, two local bad banks were allowed per province. By the end of 2019, the country had 59 local bad banks. However researchers have found that the Chinese bad banks effectively help conceal NPLs.  As India gets ready to operationalize  a new bad bank, the National Asset Reconstruction Company Ltd. (NARCL), we need to learn the following important lessons from the bad experience of the Chinese: A centralized  bad bank has a temporary purpose, and need not exist in perpetuity. Transferring NPLs to a bad bank is not a solution in itself. There must be a clear resolution strategy and the...