While inaugurating the workshop, Mr. Dinesh Rai, Secretary, Ministry of MSME acknowledged that government was aware of hardship experienced by small entrepreneurs after closure. That is why a specific provision was made in the MSMED Act to initiate action in this regard, he said. He assured that recommendations of the workshop would be taken up for implementation.
Welcoming the delegates, President FISME, Mr. Mohan Suresh, reiterated the importance of modern bankruptcy and insolvency codes to make India an entrepreneurial society but there was a need to sensitize policy makers towards them.
Highlighting the need for reforms, Mr. R. Rewari, Deputy Managing Director of SIDBI said that without modernizing insolvency and bankruptcy regime the banking and financial sector also would continue to suffer from locked assets in prolonged litigations.
The workshop held in New Delhi, was well attended by some of the top experts in the law and banking space. The experts who addressed the participants included Prof. Bibek Debroy, a noted economist of India, Dr. Lavneesh Bhandari, Indicus Analytics; Mr. M.R Umarji from Indian Banks’ Association; and Mr. Shardul Shroff of Amarchand Mangaldas.
Sharing the eye-opening results of the study on the issue, conducted by Prof. Bibek Debroy and Dr. Laveesh Bhandari, they said that post failure mechanism through RBI guidelines for restructuring of sick industries was dysfunctional. During the period when discussions go on for restructuring, government departments routinely took possession of assets and secured jail terms for small entrepreneurs. According to them it was because there was no BIFR type mechanism for restraining statutory creditors.
Mr. Shardul Shroff also recommended developing a new bankruptcy code. Mr. Umarji from Indian Banks’ Association stressed that in order to provide speedy justice, it was necessary that special bankruptcy and insolvency courts is developed.