IBC a pivotal law that allows realising value of business, not just asset value: Justice SK Ramamoorthy of Madras High Court

Madras High Court judge Justice Senthil Kumar Ramamoorthy recently observed that the Insolvency and Bankruptcy Code (IBC) is a pivotal legislation for it creates a creditor-driven model that makes it possible to realise the value of a business, as opposed to just the value of assets..The judge was speaking at a launch event held in Chennai last Friday, to mark the release of a book authored by advocate Anant Merathia, ‘Defaulter’s Paradise Lost: Demystifying the Insolvency and Bankruptcy Code.’.Justice Ramamoorthy recounted that the IBC was brought in at a time when the Non-Performing Assets and debt defaults in public sector banks across India were “piling up.”.“We all remember the period of the late 1980s and the 90s when the SICA (Sick Industrial Companies Act) was abused by all - how its provisions on moratorium were misused by all to defer action by creditors. The Bankruptcy Act came then because banks’ debts could not be recovered through civil courts. Then came the SARFESI Act but any realisation under this statute was dependent solely on the value of assets. So, we reached a stage where NPAs and dues owed to public sector banks were mounting. That led to a creditor-driven model when the IBC was drafted. With the IBC, it is possible to realise the value of a business as opposed to just the value of assets. And this is where IBC scores over other legislations,” he said..Referring to Merathia's book, Justice Ramamoorthy said was a comprehensive handbook on IBC and a must-read for judges, lawyers, and all stakeholders..Dr TK Vishwanathan, who was the Guest of Honor at the event, reminisced about his role as the Chairperson of the Bankruptcy Law Reforms Committee which was instrumental in bringing about the Insolvency and Bankruptcy Code, 2016 and his experiences in drafting the legislation. He also spoke about the datafication of information and how the Code recognises its importance. .Merathia, who is a corporate litigator and disputes resolution lawyer, said his primary objective while writing the book was to provide a “reference guide for all stakeholders” by simplifying and making all aspects of the legislation accessible to readers..He spoke about how the current generation of business owners are more inclined to be well-informed about the legal implications of legislations that impact their businesses.He further emphasised on how the onus is on professionals including chartered accountants, auditors, company secretaries, consultants, finance officials and for that matter even bankers to be on their toes and aware of all the changes in the law as the managements of corporations rely on them heavily for timely advice and the manner in which this book would be helpful for them.Merathia also shed light about how this book is a must have in the offices of small and mid-sized businesses, financial institutions & NBFCs, universities - both law and business and even foreign lawyers, as the ‘Defaulter’s Paradise Lost’ is "not just a book but a progressive initiative to empower all the concerned stakeholders impacted by this dynamic and complex legislation.".The launch event was moderated by advocate and legal columnist Sanjay Pinto.Also, present at the event were Dr TK Vishwanathan, Chairperson of the Bankruptcy Law Reforms Committee; Justice Sanjiv Jain, member (judicial) at the National Company Law Tribunal (NCLT) Chennai, and Senior Counsel PH Arvindh Pandian.