At a time when a majority of companies headed for resolution under the Insolvency and Bankruptcy Code (IBC) have been slipping into liquidation, M S Sahoo, chairperson, Insolvency and Bankruptcy Board of India, said that the focus should be on ‘resolution’ and not on ‘recovery’ as the latter leads to liquidation.
According to Sahoo, a majority of these companies which have landed up in liquidation have been malfunctioning for quite some time. However, moving forward, there is likely to be a drop in the number of cases going in for liquidation.
During the calendar year 2018, as many as 89 cases were closed either by resolution or by liquidation. Of these, there have been much more liquidation cases than resolution.
“Today companies are going into liquidation but that is not a concern because those are malfunctional companies. Our focus should be on resolution and not recovery as it leads to liquidation,” he said at a seminar on ‘IBC – Evolving Dynamics’ organised by the Confederation of Indian Industry here on Saturday.