Hindu Vivek Kendra
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Companies pay up Rs 1.1 lakh crore for fear of insolvency action

Author: Sidhartha
Publication: The Times of India
Date: October 1, 2018
URL:      https://timesofindia.indiatimes.com/business/india-business/companies-pay-up-rs-1-1-lakh-crore-for-fear-of-insolvency-action/articleshow/66021236.cms

Two years ago, when the Insolvency and Bankruptcy Board of India (IBBI) was set up, the regulator wanted to meet bank chiefs but bankers were unwilling, prompting it to seek the Reserve Bank of India’s intervention. But seven bank MDs did not turn up even when RBI convened a meeting with the IBBI brass.

Today, banks are seen to be the biggest beneficiaries of the Insolvency and Bankruptcy Code (IBC), enacted to bring rogue borrowers to book. The fear of insolvency action has helped creditors, led by banks, recover Rs 1.1 lakh crore from loan defaulters who were earlier unwilling to clear dues, with promoters of errant companies paying up to avoid losing control, sources told TOI.

So far, 977 cases have been admitted by the National Company Law Tribunal (NCLT) where either the lenders or the operational creditors, such as suppliers, have sought to initiate action. The number of cases filed is almost four times higher, sources said, but many are withdrawn before they are admitted as the borrower agrees to settle the dues. “It would be wrong to say that all the cases are withdrawn because the debtor pays up, but we are seeing that dues are cleared in a large number of cases once a case is filed,” a senior official said.
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