Insolvency cases face delays as COVID-19 spikes

India’s insolvency tribunals are hearing only a handful of cases amid the spike in COVID-19 cases, and this is going to delay the resolution of stressed assets. The death of a National Company Law Tribunal (NCLT) judge in Delhi and the rising infections among members have shocked the fraternity. Besides, fewer banks are approaching the NCLT as they do not expect buyers to quote a reasonable price in the middle of this calamity.

Ajay Shaw, a partner at DSK Legal, said, “There will be a delay in filing of fresh IBC cases. Ultimately the purpose of pursuing IBC is to ensure corporate debtors find a taker at a reasonable price and, considering the current situation and the market sentiment, the lenders are wary of very discounted prices being offered.”

As India is battling with the second wave of infections, shortage of medical oxygen, beds and ICUs has led to patients gasping for air, and many succumbing to the infection. NCLT benches across India are, therefore, hearing only urgent cases from 20 April, said insolvency lawyers .

Faisal Sherwani, partner at law firm L&L Partners, remarked, “While the suspension has been lifted, the judicial forum where one could have gone to have those issues addressed is overcome by the pandemic. Therefore, for all practical purposes, there is no longer a prohibition on new insolvency petitions, but few cases are being heard.”