Challenges in Claims Adjudication under IBC
The Insolvency and Bankruptcy Code (IBC) aims to streamline the resolution of distressed assets. A critical phase within this process is claims adjudication, where the Resolution Professional (RP) examines and admits or rejects claims submitted by creditors. This stage is fraught with challenges that can significantly impact the success of the resolution process.
The Role of the Resolution Professional (RP)
The RP acts as a crucial intermediary, responsible for managing the Corporate Debtor's affairs during the Corporate Insolvency Resolution Process (CIRP). Their duties include receiving and collating claims, verifying their validity, and admitting or rejecting them based on the evidence provided and the provisions of the IBC. This role demands impartiality, diligence, and a thorough understanding of financial and legal intricacies.
Key Challenges in Claims Adjudication
Impact on the Committee of Creditors (CoC)
The challenges in claims adjudication directly impact the Committee of Creditors (CoC). Inaccurate or disputed claims can lead to incorrect voting shares, affecting the CoC's decision-making power. Furthermore, delays in adjudication can postpone the approval of a resolution plan, prolonging the uncertainty and potential value erosion for all stakeholders.
Strategies for Mitigation
To address these challenges, RPs often employ robust verification protocols, leverage technology for data analysis, and seek expert opinions when necessary. Clearer guidelines from regulatory bodies and timely judicial pronouncements also play a crucial role in providing clarity and consistency in claim adjudication.
To receive, verify, admit, or reject claims submitted by creditors based on evidence and IBC provisions.
The sheer volume and complexity of claims, disputes over claim validity, information asymmetry, or the risk of fraudulent claims.
It can affect their voting shares and decision-making power due to disputed or inaccurate claims, and delays can postpone resolution plan approval.
Learning Resources
The official text of the Insolvency and Bankruptcy Code, 2016, which forms the legal basis for all insolvency and bankruptcy proceedings in India.
Provides access to various regulations framed by IBBI, including those related to the Corporate Insolvency Resolution Process (CIRP) and claims submission.
A blog post discussing common challenges faced during the claims adjudication process under the IBC, offering practical insights.
Explains the multifaceted role and responsibilities of a Resolution Professional, including their duties in managing claims.
Access to judgments delivered by the National Company Law Tribunal (NCLT), which often interpret and clarify aspects of claims adjudication.
Key Supreme Court judgments that have shaped the interpretation and application of the IBC, including critical rulings on claims and resolution.
A comprehensive practice manual for professionals dealing with IBC, often containing detailed sections on claims and their adjudication.
An overview of the IBC, covering its various stages and key aspects, including a discussion on claims and their management.
An academic article discussing the practical challenges encountered during the CIRP, with a focus on issues like claims and stakeholder management.
A discussion paper by IBBI that delves into the intricacies of claims resolution, highlighting potential issues and suggesting improvements.