IBC, Delays and Information Assymetries: Can Blockchains Help?
Book chapter for IBBI's Annual Publication on the Insolvency and Bankruptcy Code, 2016
Summary: This book chapter examines the potential of harnessing blockchain technology for easing existing bottlenecks in the functioning of the Insolvency and Bankruptcy Code 2016.
The Insolvency and Bankruptcy Code, 2016 (Code) fundamentally re-oriented the Indian financial distress resolution framework and has driven a paradigm shift towards institutionalising a predictable, market-led, and time-bound insolvency and bankruptcy system in India. However, evidence is building that legal proceedings under the Code are being plagued by prolonged delays, which is antithetical to the Code’s objective and purpose. Informational asymmetry and lack of access to reliable financial information is an observed cause delays in this context, and the Code builds in measures like reporting requirements and mandates Information Utilities (IUs) to boost informational synergies between various stakeholders. Yet it appears that these measures have not proved sufficiently efficacious.
This book chapter in IBBI’s Annual Publication for 2021: ‘Quinquennial of Insolvency and Bankruptcy Code, 2016’ released at its Fifth Annual Day, discusses the need to think about forward looking and permanent solutions to curb delays under the Code and explores if blockchain technology can be harnessed to ease existing informational bottlenecks and streamline the Code’s legal processes, enable seamless information exchange between stakeholders, and modernise IU operations and functioning.