Legal Era Leads the Way for the World of Business, Law, and Insolvency with the 6th Annual Insolvency & Bankruptcy Summit (IBS) 2021

8th October 2021 marked yet another critical occasion in the fast-evolving Indian Legal Industry and its dynamically changing practice area of cross-border insolvency. Legal Era-Legal Media Group's 6th Annual Insolvency Summit 2021, renowned for transforming the narratives in the legal industry was virtual and live.

Eminent global experts from Asia, elite business lawyers, and global thought leaders came together to analyse and dissect the Insolvency and Bankruptcy Code and its impact to understand the mindset and hurdles faced by operational creditors, promoters, and the response to the structural change.

With global speakers, 3 Key Eminent Keynote Speakers, 6 panel discussions, and 370 delegates highlighting the impact, trends, and future of the IBC implemented in 2016, this invite-only Summit kept the attendees engaged across geographies and domains, not limited to practitioners in the insolvency practice area.

The theme of the Summit was 'New normal era - trends, challenges, opportunities & future in Asia'. The excellent and pertinent range of subjects of discussion included cross-border insolvency and enforcements, litigation funding in IB disputes and navigating distressed investing in the pandemic era, insolvency practices in the new normal era, and way forward for stressed assets resolution in India.

Nothing could have been more interesting than to leverage the changing tides of time as the power of the high-level discussions were especially focussed on New Normal Era - Trends, Challenges, Opportunities & Future in Asia.

Eminent global experts like Amarjit Singh Chandhiok, President-Elect, Bar Association of India, Dr. T. K. Viswanathan, Chairman Bankruptcy Law Reforms Committee, and Justice A.K. Sikri, Former Judge, Supreme Court Of India discussed key subjects. That included cross-border insolvency, litigation funding, navigating distressed investing, rescue financing, and the challenges and opportunities that lay ahead in Asia.

Is the recovery rate likely to slip further as the IBC regime reopens after a yearlong hiatus? Will there be a new code for creditors, and if so, what influenced it? And most importantly, what will change, and how will we navigate this new normal? The who's who of the world of law and business joined the Summit to know the answers to these questions. And they sure enjoyed the enthralling conversations as the eminent panellists and speakers dove into the several potential issues like our slowing economy, uncertain prospects, and reduced buyer interests that determine the way forward.

Sure enough, the day-long Summit had proven to be successful like all other events organized by the Legal Era. Even as the crisply conducted sessions progressed, the attendees made full use of the gold standard opportunity to know, explore, and got introduced as they interacted with judges, partners, GCs, external and in-house lawyers, and many more decision-makers in the legal industry.

The Summit began with an invigorating Opening Address by a stellar panel of Amarjit Singh Chandhiok, President-Elect, Bar Association of India, Dr. T. K. Viswanathan, Chairman Bankruptcy Law Reforms Committee, Justice A.K. Sikri, Former Judge, Supreme Court of India.

All the three distinguished guests captured the IBC Code's evolution, achievements over the last 5-years short period, challenges that lie ahead, and the journey of insolvency law in the light of the recent "India Parliamentary Committee Report: Issues, Recommendations & Implementation."

Amarjit Singh Chandhiok, the founder and President of the 25-year-old organization Insol India, shared the journey of the IBC Code optimistically and holistically. He opined, "Covid brought so many new changes for us. But from the perspective of the resolution professional to the Supreme Court, each one of us has played a role to make sure IBC does not meet the same fate as SICA or Debt Recovery legislations. Rather, we are seeing new trends. I congratulate everyone who participated in the evolution of IBC. We have had 5 years of IBBI report. We have now started looking at insolvency at the LLP level. People had expressed apprehension that there was no profession as being a resolution professional – but we have seen people have risen to the occasion – lawyers, CAs, CS."

He made a vehement appeal that IBC was not a recovery process. We shouldn't see what the percentage of the recovery is. Rather, his vision was "I'm looking at a day where the COC or resolution professional will say – We will look at pre-package and see how we restructure them at our level even before we come into the level of CIRP process. Approve a plan where we're able to restructure the industry in a way that it's utilized for public purpose."

Looking ahead, Mr. Chandhiok made a couple of suggestions to build and strengthen the IBC's robust implementation and evolution.

1. We have to think about what kind of support we are giving to the Supreme Court so as the enable it to make the right decisions on insolvency law and interpretation of the IBC Code.

2. Everything is interwoven. We cannot have one legislation to look at for insolvency. We need to combine it with mediation too.

3. The time has come to look at cross-border differently. We all professionals have to give ideas to see how we can manage cross-border considerations more so as a part of the economic condition of the country. It's an opportunity.

4. We have to test IBC concerning personal insolvency also. At the moment the DRT was overwhelmed with work. So district judges were probably better to confer jurisdiction.

Mr. Chandhiok noted that Legal Era had collected voluminous information to help the insolvency regime's evolution. And with this Summit, he said, "We will be able to carve out the challenges and bring out solutions and see the best we can do by suggesting the perspectives and recommendations arising from this Summit to IBBI and Legislature.

Mr. Chandhiok concluded by highlighting that an annual moot court dedicated to the IBC in NLU Delhi got 41 entries last year even at the peak of the pandemic. This year, the entries will be even more. That was a telling sign for the future of India's insolvency and bankruptcy practice. The opportunities will only increase.

IBC 's five years journey has paved way from a robust Insolvency and Bankruptcy regime. Extension of prepack resolutions to one and all coupled with Cross border provisions are the need of the present era.

Dr. T. K. Viswanathan, the person who laid down the foundation of the IBC Code passionately shared how the IBC Code was not just important legislation but also a distinct one.

"The IBC is a jewel in the Indian statute book and historical reform legislation. The Code infused a new wave of legal reform using data analytics, AI, market indicators and keeps the law in sync with socio-eco realities. It has a sharp focus on the relationship between law and economics. The Code is a piece of eco legislation and a result of the government's response to challenges faced by the country in a fast-changing global economy. The code represents the current market realities and is supplemented by a rich ecosystem that other Acts of parliaments lack."

Dr. Viswanathan highlighted how the IBC Code was robust, visionary, and extremely effective legislation.

1. The IBC Board is futuristic in design and can accommodate the need for a digital environment and digital documentation. Tele-linked environment cutting across jurisdictions and courts is welcomed. The pandemic has forced everyone to accept virtual court hearings.

2. While cross-border insolvency matter was not provided for in the code draft, that will require bankruptcy judges on a joint hearing. UNCITRAL Model Law provides mechanisms for cross-border insolvency concurrent proceedings/ joint hearings between two courts. The DRT Act also provides for online mediation.

These two developments will push IBC proceedings to virtual mode.

3. Datafication of information and not just digitization of information ie. to put information in a quantified format. And to capture such quantifiable info – we need to know what to measure and how to measure. For that, the government is setting up a central registry. The government will also have to create a Public Credit Records Authority for efficient credit decision-making.

4. In law itself, we are looking at leveraging big data - statistical, new techniques, and algorithms to search for patterns in data and create a wealth of useful information to fortify legal arguments.

Dr. Viswanathan acknowledged that there had been criticism of the IBC Code but the real concern was the 2021 report on IBC by the standing committee of finance. Its recommendations included that the IBC Code needed to be revisited in light of its original purpose and objectives. As against that, Dr. Viswanathan put forth three arguments:

1. The IBC is an act of parliament. It cannot be modified to solve teething difficulties such as in case of stray instances of the Court's digression. We are in the middle of the transition and tension between the old legal order and the new legal order.

2. Legacy cases before the enactment of the code were overwhelming. Once the backlog is cleared, the credit market will improve.

3. No other Act contains so much data that enables the assessment of the effectiveness of legislation. The IBC readily provides these standards. So any appraisal of the Code should be seen in that light.

4. The IBC was not recovery legislation. Judging the IBC's effectiveness based on the number of cases resolved was not the correct benchmark.

The Insolvency and Bankruptcy Code 2016 is futuristic in design and can accommodate fast changing technological innovations and challenges the lawyers to change their approach to law itself by looking into Big Data and Data Analytics rather than focusing on the bare bones of black letter law

Agreeing with Mr. Chandhiok, Dr. Viswanathan concluded, "As the Code continues to be in force, the ecosystem will play a role in helping the transition from the pre-IBC legal order to the ongoing post-IBC legal order. Everyone is positively working towards it. An entire community of resolution professionals has emerged. Our NCLTs and NCLATs are delivering beyond their means and they need our support."

Justice A.K. Sikri, a globally acclaimed arbitrator and also famously called by the legal fraternity "a resolution judge," shared great Spirit and camaraderie with Mr. Chandhiok and Mr. Viswanathan on the evolution and vision of the IBC. He began with applauding Legal Era for being associated with Insolvency law right from when the Code came into effect. Justice Sikri especially noted that as well as these occasions for sharing views and coming up with solutions, "Legal Era has been preparing statements and reports on the IBC and deliberating on it every year. This is commendable."

Agreeing with Mr. Chandhiok and Mr. Viswanathan, Justice Sikri highlighted that IBC steals the limelight among all legislations because, "The IBC not only connects law with the economics, it is also connected with the economic progress of the nation."

He opined, "In the era of globalization and liberalization, we talk of India becoming a 5 trillion economy in next few years and attracting FDI…this cannot be achieved with efforts at the government level alone. We need laws that give impetus to such growth. UNCITRAL is coming up with model laws. All the primary objectives that UNCITRAL stated were kept in mind while drafting the IBC. That far-sightedness was there. We didn't have any comprehensive law on that before the Code finally fructified after a long movement for insolvency regime."

Justice Sikri explained that the main purpose of IBC was not to act as a recovery agent, just as Mr. Chandhiok and Mr. Viswanathan highlighted. "The main aim was to ensure that when any cause is brought to NCLT, the first attempt is resolution process to save that institution or corporate - and if that fails, then we talk of insolvency and value maximization." Even as IBC was not machinery for recovery, Justice Sikri was wise to point out that recovery remains one of the aspects in case rehabilitation fails. And on that note, he shared some inspiring data points.

"Economic Survey 2020 reported that we had a 42.5% recovery rate.

In the Essar Steel case, the court paved the way for the receiver to get 92% of the total debt.

The country's Insolvency Ranking had improved from 136 to 52 in 2020.

The Resolution process time has reduced from 4.3 years to 1.3 years in 2020.

It was a debtor regime earlier and now creditor is in control."

On the issue of criticism against the Code, Justice Sikri was optimistic about the strides we had made in the last 5 years of the Code's implementation. The stakeholders have owned up and stepped forward and the market has responded and supported.

"All stakeholders including lawyers appearing, judges manning the NCLT right up to the Supreme Court, creditors, IP resolution professionals, the IBBI and Dr. Sahu's phenomenal work - all have worked with zeal and commitment. Keeping in mind the timelines, the Supreme Court has taken a lead not only in removing the cobwebs in interpretation and advancing the IBC law, by many celebrated judgments but all that has been done in a timebound frame.

We were even recognized globally for bringing insolvency reforms, and if we brought cross-border insolvency into the Code, we would bag the international recognition again"

Going forward, Justice Sikri highlighted a couple of challenges and shared his recommendations.

Experience had shown that the struggle will always be there between creditors' rights and rehabilitation. Two opposing questions - Why should promoters be in control during rehabilitation when they have brought the company to the condition of insolvency? Should the running of the company be given to a person who has no idea how to run the business during the interregnum? From debtor to a creditor in control - there has to be a balance. And that is the challenge for NCLAT – what kind of resolution they bring about. The resolution plan should not just be what's best for the corporation, but what's also best in the interest of the nation.

The other challenges Justice Sikri highlighted were high haircuts, never-ending litigation and time delays, empty benches in the NCLT and the NCLAT making it impossible to meet the timelines laid out in the IBC, MSMEs getting the impression that they were losing out even as they are the backbone of the economy accounting for 28% of the GDP, the void of cross border insolvency, and the additional challenges due to Covid.

Justice Sikri concluded his address by reinforcing that IBC implementation needed all strategies to come together – leveraging big data, use of AI, online dispute resolution, coupled with mediation. Neither could work in silos. He recommended Richard Susskind's works – "Future of Law" and "Online court and future of justice" like two great books to understand what kind of automation to use.

All three distinguished guests congratulated Legal Era for constantly creating occasions such as this Insolvency Summit to capture new legal trends such as now, in the new normal era, and developments in the area of insolvency.

Next came the most-awaited, first-panel session of the day. The focus was on 'Cross border insolvency.' Moderated by Nirav Shah, Partner, DSK Legal, the panellists were Peter Bowden, Partner, Gilbert + Tobin, Rishi Hindocha, Counsel, Allen & Overy LLP, Joanne Collett, Partner, Walkers, and R S Sachdeva, President(Group - Legal), JK Organization. They shared thoughts and learnings on hot topics of today.

IBC has been a game changer for the lender community in India. It has changed the behaviour of defaulting companies and promoters. There is one area which still needs to be plugged to ensure the lenders are able to recovery their dues to the full permissible extent. And that is incorporation of cross border insolvency provisions in the IBC. This will help all lenders get access to assets / money parked overseas by companies and its promoters said Nirav Shah, Partner, DSK Legal

Right after this mature and rich discussion that left attendees with umpteen food for thought, the attendees braced themselves for the meaty panel discussion on 'Way forward for stressed assets resolution in India.'

Dinkar Venkatasubramanian, Partner & Head Restructuring & Turnaround, EY Restructuring LLP moderated the session adeptly.

The panellists included Rahul Chawla, Co-Head, Investment Banking Coverage, Deutsche Bank, Veena Sivaramakrishnan, Partner, Shardul Amarchand Mangaldas, Eshwar Karra, CEO, Kotak Special Situations Fund, Avinash Kulkarni, Chief Executive Officer, India Resurgence ARC Pvt, and Anjali Jain, Partner & Head – Insolvency & Corporate Practice, Areness.

The panellists captured their views on relevant angles such as the Evolution of corporate stress resolution over the last 5 years, strengthening the IBC Framework in light of the Parliamentary Committee report, Alternatives to IBC for Stress Resolution, and Role of Distressed Investors.

Dinkar Venkatasubramanian, Executive Vice, Partner & Head Restructuring & Turnaround, Ey Restructuring LLP said "Our context is unique. We had a build-up of NPAs in 2017 imposing a logjam on economic growth. IBC, since it was enacted, has been fantastic in driving these NPAs down to ~7.5% by 2021.

However, the pandemic stress and the sheer volumes of cases needs a multi-pronged approach to stress resolution going forward - involving a change in mindset of lenders, an effective pre-insolvency resolution mechanism, a stronger IBC and an unencumbered flow of private capital." 

"Pre-litigation mediation in IBC legal proceedings is the immediate solution to reduce the workload burden on the insolvency judicial infrastructure." quoted Anjali Jain, Partner, Areness

That led the way for the attendees to absorb the subject: 'Cross border enforcements: defaults & asset tracings.' Ian De Witt, Partner, Tanner De Witt Moderated the discussion with panellists  Michael Redman, Managing Director, Burford Capital, and Arush Khanna, Co-founder & Partner, Numen Law Offices & Vijayendra Pratap Singh, Partner, Head Litigation, AZB & Partners

The Insolvency and Bankruptcy Code is an evolving jurisprudence. I think the time has come to seriously consider the recommendations of the Insolvency Law Committee and suitably adopt the UNCITRAL Model Law on Cross Border insolvency. This will go a long way in reducing delays and uncertainties for creditors who have security interests in assets of corporate debtors situated outside India -said Arush Khanna, Partner, Numen Law Offices

While insightful discussions sparked some interesting conversations, all through, the attendee's social media handles also kept buzzing as they shared images and sound-bites of an impressively organized and conducted virtual Summit.

'Navigating distressed investing in the pandemic era' was the subject of the fourth-panel discussion of the day moderated by Ajay Shaw, Partner, DSK Legal.

The panellists were Aswini Sahoo, Executive Vice President & Chief Investment Officer, Asset Reconstruction Company (India) Limited, Shailen Shah, Partner, BSRR & Co., Ashutosh Maheshwari, Founder & CEO, IMAP, and Sumesh Dhawan, Managing Partner & Founder, Dhawan & Co.

IBC is a path breaking economic legislation; initiatives to make the Code less prescriptive with a focused commercial outlook and limited judicial interventions can take it a long way. Pre-packaged insolvency is one such great step towards time bound rehabilitation of Indian distressed businesses -said Shailen Shah, Partner, BSRR & Co.

The Summit propelled ahead with an exciting session on 'Rescue Financing.' The panellists were David Chew, Partner & Founder, DHC Capital, Jyoti A Singh, Founder, AJA Legal and Associates; Pooja Mahajan, Managing Partner, Chandhiok & Mahajan, Advocates & Solicitors; Kumar Saurabh Singh, Partner, Khaitan & Co . This session was moderated by Nitin Jain, Partner - Restructuring & Turnaround, EY India

A vibrant and effective rescue finance market is necessary for ensuring effective resolutions and minimum destruction in value of stress companies. Banks need to be more pragmatic in considering allowing of sharing of security and ceding priority charge on cash to allow new lender to provide rescue capital in stress situations quoted Nitin Jain, Partner, EY India

The panels made way for another exciting session on 'Litigation funding in IB disputes' moderated by Anoop Rawat, Partner, Shardul Amarchand Mangaldas with panellists Piyush Prasad, Counsel (Foreign Law), Wong Partnership, and Annat Jain, Managing Director, Payard Investments Pvt Ltd and Arvindran Manoosegaran, Investment Manager, Omni Bridgeway sharing their perspectives.

The session on litigation funding was well curated and timely in view of the pandemic and the hurdles it has created for businesses in obtaining funding. I thoroughly enjoyed interacting with my Panelists.

Litigation recoveries have a huge potential in the Indian IBC context. This can be developed as an excellent asset class which would improve the recovery ratio for the creditors. Right processes need to be built around this asset class in order to give predictability to both creditors of the corporate debtor and the investors who fund this asset class. quoted Anoop Rawat, Partner, Shardul Amarchand Mangaldas

Piyush Prasad, Counsel (Foreign Law), Wong Partnership quoted IBC is a path breaking economic legislation; initiatives to make the Code less prescriptive with a focused commercial outlook and limited judicial interventions can take it a long way. Pre-packaged insolvency is one such great step towards time bound rehabilitation of Indian distressed businesses

As this final Panel Discussion unfolded, the attendees knew that they had enjoyed 2021's enriching day of power-packed sessions extremely relevant in today's increasingly tech-savvy and inter-dependent marketplace.

Backed by sponsors and partners such as P&A Law Offices, DSK Legal, Society of Indian Law Firms (SILF), Areness Attorneys, Chandhiok & Mahajan, Advocates and Solicitors, and Shardul Amarchand Mangaldas, the one-day Summit was yet another milestone in suggesting a credible way forward for the Legal Industry in India and outside.

Here's to always staying ahead of the curve and enabling critical opportunities to present views, raise tough questions, share key learnings and experiences – with absolute class, practical knowledge, and finesse.