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.
Abstract
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.
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About the Authors
Debanshu is one of Vidhi’s Co-Founders. He has over a decade of experience in commercial laws and the financial sector and has advised the Government of India on several legislative projects in this space. He was instrumental in advising the Government on the design and drafting of the Insolvency and Bankruptcy Code and its subsequent implementation. He has developed and curated Vidhi’s work on insolvency law, corporate law, financial regulation, and competition law and conceptualized its Bankruptcy Research Program. He has served as a member of a Government-appointed committee for operationalizing the National Company Law Tribunal and deposed before two Parliamentary committees examining financial sector legislation. He has also worked as a teaching fellow at Harvard Law School. He is an alumnus of the Harvard Law School, the University of Oxford, and Hidayatullah National Law University. He attended Harvard as a Fulbright Scholar and was awarded the Irving Oberman Memorial Prize in Bankruptcy and the Dean’s scholar prize in Corporations. He was also awarded a Distinction for his graduate studies at Oxford. In 2017, he was selected for NYU School of Law’s Hauser Global Scholarship, which he waived. His academic work has been published in peer-reviewed journals and an edited book published by Cambridge University Press, New York. He has been consulted by and mentioned in global business publications, such as IFR Asia and The Economist. Earlier, Debanshu practiced as an M&A and regulatory lawyer with AZB & Partners at its Mumbai and New Delhi offices.
Aditya was a Senior Project Fellow with the Corporate Law and Financial Regulation Team. His research interests lie in emerging legal issues at the intersection of technology, commerce, and finance. Aditya graduated from the National University of Juridical Sciences, Kolkata (NUJS) with a B.A., LLB. (Hons.) in 2017. Prior to joining Vidhi, Aditya worked at the law firms Shardul Amarchand Mangaldas & Co as an associate and at Khaitan & Co as a senior associate. He has advised on diverse range of complex commercial transactions and litigation. He has extensive experience in the fields of commercial and financial laws and specialized knowledge of technology and telecommunication laws.
