An autonomous research institute under the Ministry of Finance


Designing a Personal Insolvency Regime: A Baseline Framework

Publication date

Oct, 2020


IBBI year book 2020, Chapter 31, Insolvency and Bankruptcy regime in India: A Narrative, October 2020


Adam Feibelman and Renuka Sane


In December 2019, the Insolvency and Bankruptcy Board of India (IBBI) notified provisions for insolvencies of personal guarantors to corporate debtors under that country’s Insolvency and Bankruptcy Code, thereby putting those provisions into force. While the Code and regulations for personal guarantors set out a broad framework for the personal insolvency regime, it is still unclear whether there will be limits, requirements, or guidance for various aspects of repayment plans that debtors must propose in insolvency. This paper proposes that repayment plans and other aspects of the insolvency process should be standardized enough to ensure a baseline treatment of both debtors and creditors, subject to some flexibility for unique or exceptional circumstances. While a generally negotiated process may be appropriate for commercial debtors under the Code, there are good reasons to believe that the process for personal debtors should be significantly more rule-bound. If the basic design of repayment plans can be specified, it might be best to dispense with the need for creditors to vote to approve plans, except perhaps to approve plans with more generous relief to debtors, and the Board or the adjudicating authorities might also adopt an approach to ‘fast-track’ debtors to bankruptcy who are unlikely to be able to repay any significant amount to creditors in insolvency.
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