IBBI expert panel bats for specialised insolvency mediation
- An IBBI-appointed expert committee headed by former Law Secretary has recommended a voluntary mediation framework under the Insolvency and Bankruptcy Code (IBC).
Key Highlights
- Currently, mediation does not exist as a legislative mandate under IBC.
- Mediation is the use of a neutral third party to facilitate the negotiated settlement of a dispute and resolve conflicts between two or more parties.
- The Committee has taken a cautious approach and endeavoured to balance the fundamental objectives of the Code,
- I.e., “time-bound reorganisation” and “maximisation of value” with autonomy to parties to voluntarily opt for the ‘out-of-court’ mediation process to enhance efficiency of the insolvency resolution process.
- The Committee has recommended a “stage based” and phased introduction of voluntary mediation as a dispute resolution mechanism under the Code,
- While maintaining the sanctity of the timelines for various existing insolvency resolution processes.
Flexibility in process
- The core essence of the framework is its independence and flexibility to provide room for quick incorporation of implementational learning.
- The committee recommended the likely framework for the introduction of mediation as a complementary mechanism
- For resolution of disputes around the processes under the Code.
- The mediation framework would best operate as a self-contained blueprint within the Code
- With independent infrastructure to ensure that the objectives of the Code are met without compromising or diluting the basic structure of the Code in terms of timelines, public rights.
- However, there are critical issues that require attention before the scheme is implemented.
- One notable concern is the exclusion of financial creditors from the initial scope of voluntary mediation provisions.
Prelims Takeaway
- Insolvency and Bankruptcy Code (IBC)
- Insolvency and Bankruptcy Board of India