Separate route on anvil for individual insolvency cases

The corporate affairs ministry has asked debt recovery tribunals (DRTs) to provide a separate route for resolving individual insolvency cases so that such applications can be expedited. The government is expected to announce the framework for notification for individual insolvency.

So far, it has only notified the Insolvency and Bankruptcy Code (IBC) for corporate persons.

“We want to take the DRT on board to assure us that they will give a separate route and not put individual insolvency cases in existing queue… We are also trying to understand their own pendency of cases,” said a senior government official, who did not wish to be identified.


The ministry has suggested that DRTs designate special benches for resolution of individual insolvency cases. DRTs were established in 1993 under the department of financial services.

Under the current mechanism, while corporate debtors approach the National Company Law Tribunal (NCLT) for bankruptcy and insolvency resolution, individual insolvency cases are referred to DRTs. There are around 1,988 cases pending in the NCLT, which was set up in June 2016 after the IBC was introduced. Since then the NCLT has disposed 2,750 cases.

Pendency of cases in DRTs is much higher, at nearly one lakh. The government is hoping that for individual cases the conciliation and mediation process will become a powerful instrument for resolving cases, officials said. It is expected that nearly 75% of cases should get resolved at pre-litigation stage.

“We will need variations in the code for individuals and MSMEs (micro, small and medium enterprises) at a later stage… We will do it and bring the required changes,” said the senior official cited earlier.

The code for individual insolvency is likely to be implemented in phases, according to officials. In the first phase, the policy will focus on individuals who are guarantors to corporates undergoing resolution process.

The ministry will also look at creating institutional infrastructure to resolve individual insolvency cases, officials said.