Parliamentary Panel Pushes For Fast-Track Insolvency Courts, More NCLT Benches

A Parliamentary Standing Committee on Finance has recently recommended exploring the creation of dedicated fast-track insolvency benches for fixed periods to shoulder insolvency resolution burden of existing benches. Besides that, the committee has also highlighted urgency to increase the number of National Company Law Tribunal (NCLT) benches across India to tackle pending and growing delays in disposing cases. In its 28th report reviewing the working of the IBC, presented to Parliament on December 2, 2025, the committee noted that capacity constraints at adjudicatory forums, particularly the National Company Law Tribunal and the National Company Law Appellate Tribunal, are affecting the timely disposal of insolvency cases and, in turn, the effectiveness of the CodeThe committee observed that delays at both the admission and resolution stages are primarily due to a shortage of functional benches, persistent vacancies of judicial and technical members, and an excessive caseload.It recorded that insolvency matters frequently overshoot statutory timelines owing to repeated adjournments and prolonged hearings on interlocutory applications. Referring to available data, the committee noted that as of October 31, 2025, a total of 8,715 corporate insolvency resolution processes had been admitted since the Code came into force.Of these, 1,322 corporate debtors were resolved through approved resolution plans, while 2,758 cases ended in liquidation and 1,926 cases were still ongoing, underscoring the pressure on the existing institutional framework It expressed concern that prolonged timelines discourage serious resolution applicants from participating in the process and increase the likelihood of stressed companies being pushed into liquidation rather than revival. It noted that liquidation outcomes remain weak, with assets of companies sent into liquidation averaging only about 6 percent of outstanding debt in many cases, often because economic value had already eroded by the time insolvency proceedings commenced While flagging these challenges, the Committee acknowledged that the IBC has delivered meaningful outcomes where resolutions are achieved in time. It recorded that creditors have realised about Rs 3.89 lakh crore through resolution plans till March 2025, amounting to 32.8 percent of admitted claims and 170.1 percent of liquidation value The panel also examined the views of the Reserve Bank of India on procedural delays. In its submission, the RBI said delays at the admission stage could be reduced by making timelines mandatory rather than directory. It also suggested a binding code of conduct for creditors to prevent disputes over distribution of proceeds from stalling the resolution process To address the structural issues, the committee recommended increasing the number of NCLT benches, urgently filling vacancies of judicial and technical members, strengthening registry and technical support, and examining the feasibility of fast-track benches dedicated to high-value insolvency matters The committee concluded that timely augmentation of adjudicatory capacity is essential to ensure value maximisation of stressed assets and to sustain confidence in the insolvency framework envisaged under the IBCprocess To address the structural issues, the committee recommended increasing the number of NCLT benches, urgently filling vacancies of judicial and technical members, strengthening registry and technical support, and examining the feasibility of fast-track benches dedicated to high-value insolvency matters The committee concluded that timely augmentation of adjudicatory capacity is essential to ensure value maximisation of stressed assets and to sustain confidence in the insolvency framework envisaged under the IBCClick Here To Read/Download The Report

Parliamentary Panel Pushes For Fast-Track Insolvency Courts, More NCLT Benches

Kirit Singhania

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