Suvan & SNG assist on setting up the first IU under the IBC – NeSL

In a first, the National e-Governance Services Ltd (NeSL), a Union Government company, has now received final registration to become first Information Utility (IU) of India..Yesterday, the Insolvency and Bankruptcy Board of India (IBBI) granted it a renewal registration from September 25, 2017 to September 24, 2022..Provisions relating to IUs are contained in Chapter 5 of the Insolvency and Bankruptcy Code, 2016..This institution of the IU seeks to cure one of the problems that plagued the erstwhile insolvency regime i.e. of discovering and disclosing the true nature of the borrower’s financial liabilities to its various creditors. As soon as the insolvency of a borrower would be triggered, all creditors would individually and collectively try to ascertain the financial picture of the defaulting borrower, during the course of which, the borrower would (more often than not) lose value each day spent ‘ascertaining’..IU essentially acts as a data storage entity that collects information from various sources and stores it in an electronic format in a safe and secure manner. The IU will ensure that when a financial firm uploads information about its (pending) financial liabilities, such information is verified by all necessary parties to ensure its authenticity..This way, it will provide a level playing field in the financial contracts by storing facts of borrowing, default and security interest with safeguards like authenticating the terms of contract, digital storage of details by IU in a central server with information security policies wrapped around, and providing effective retrieval facilities for Insolvency Professionals/DRT/NCLT to proceed with their roles in time bound manner..Last month IBBI Chairman M S Sahoo had announced that setting up of an IU will be a game changer in the market. Finance Minister Arun Jaitley has also been asking the industry and IBBI to implement bankruptcy law in a time-bound manner..NeSL was set up by leading banks and financial institutions like SBI, LIC, Canara Bank, BOB, HDFC, ICICI Bank, Axis Bank, etc. NeSL at Mumbai and Bangalore presently..S Ramann, IAAS in the rank of Additional Secretary and Former ED of SEBI is the MD & CEO of NeSL. He thanked the regulator IBBI for reposing faith in NeSL..Suvan Law Advisors along with SNG & Partners are the law firms advising NeSL on this landmark phase of the Code while the Indira Gandhi Institute of Development Research (IGIDR) is the knowledge partner to IU.