Preliminary Study of India's Insolvency Regime

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RACING TO RESOLUTION: A PRELIMINARY STUDY OF
INDIA'S NEW BANKRUPTCY CODE
HON. JASON D. WOODARD*
ABSTRACT
Motivated in part by its low rankings in the World Bank's annual

Doing Business reports, India enacted a new bankruptcy code in 2016.
The new law is significantly different from the United States' highly-
ranked code but was likewise designed to engineer a rise in the World
Bank rankings. This Article examines the dynamic from two perspec-
tives. PartII is a descriptive comparison of the two codes, highlighting
the similarities, the stark differences, and unique features of each code,
as well as the new Indianfocus on creditors'rights and the U.S. focus on
debtor protections. PartIII, focused on India, is an empirical analysis
and critique of the World Bank methodology, which is grounded in
surveys based on hypothetical scenarios. This Article examines the Doing
Business reports for the three-yearperiods before and after enactment of
the new law and compares those reports to actual bankruptcy case data
made availableby the Indian government. This Article further examines
the trends in capital markets and debt resolution both before and after
the new law. This Article concludes that the DoingBusiness results have
not corresponded with actual results in India, at least during the study
window.
I. INTRODUCTION
Vijay Mallya's birthday party lasted three days. The self-pro-

claimed "King of Good Times" hosted celebrities and business
titans at his coastal villa in Goa, the highlight being a private con-
cert by Spanish pop star Enrique Iglesias. Mr. Mallya's company,
Kingfisher Airlines, whose debts he had guaranteed but not paid,
* Chief United States Bankruptcy Judge, Northern District of Mississippi. This Arti-
cle began as my thesis for the Judicial Studies LL.M. program at Duke University School of
Law. I would like to thank my esteemed judicial classmates, Professors Mitu Gulati and
Jack Knight, and especially my advisor Professor Elisabeth de Fontenay, for their guidance
through this process. Professor Adam Feibelman of Tulane University was also a great
sounding board. Thank you also to my law clerks Jamie Wiley, Adolyn Clark, Amanda
Burch, Andrew Cicero, and Jack Schultz for their invaluable assistance, and to the editors
of the The George Washington International Law Review for their improvements to the
Article. Finally, thank you to my family for their patience during this process.
393
394 The Geo. Wash. Int'l L. Rev. [Vol. 52
had never turned a profit and had been out of business for over
three years.1
Three months later, Mr. Mallya fled the country owing over a
billion dollars to banks, vendors, and employees. The Indian gov-
ernment labeled him a "willful defaulter," a person who refuses to
pay his debts despite having the means. He was also criminally
charged with fraud and money laundering related to the King-
fisher loans, and in 2017, was arrested in London where he contin-
ues to fight extradition. While some amounts have been recovered
through asset sales, a consortium of Indian banks contends he still
owes over 29000 crores ($1.3 billion) 2 on loans that have been in
default since 2012.3 Banks, politicians, and the media quickly
made the King of Good Times the poster child for the need to
reform India's debt collection laws. 4
Mr. Mallya's story is a high-profile example of what was a more
mundane problem for the world's largest democracy. Even though
India was often lauded as having one of the world's most robust
emerging economies, its credit markets were underdeveloped. 5 In
the World Bank's 2014 Doing Business report, India's overall ease of
1. Exit, Pursued by a Tiger: A New Bankruptcy Code Is Reshaping Indian Business, ECONO-
MIST (Apr. 21, 2018), https://www.economist.com/business/2018/04/20/a-new-bank-
ruptcy-code-is-reshaping-indian-business [https://perma.cc/UX9Q-KNB4]; Megha Bahree,
Vijay Mallya, Indian 'King of Good Times,' Dethroned by Debt, N.Y. TIMES (Apr. 28, 2016),
https://www.nytimes.com/2016/04/30/business/dealbook/india-vijay-mallya-debt-econ-
omy.html [https://perma.cc/VA8Y-NRG5].
2. One "lakh" is one hundred thousand. One "crore" is ten million. On March 31,
2019, the Indian Rupee to U.S. Dollar conversion rate was Z1:$0.01440, so one lakh was
$1440 and one crore was $144,000. Indian Rupees (INR) to US Dollars (USD) Exchange Ratefor
March 31, 2019, ExCHANGE-RATES.ORG, https://www.exchange-rates.org/Rate/INR/USD/
3-31-2019 [https://perma.cc/8E7T-8Z3F] (last visited Aug. 15, 2020) [hereinafter Exchange
Ratefor March 31, 2019].
3. 'PleaseTake My Money': Vijay Mallya Urges Centre to Drop ChargesAgainst Him, SCROLL
(May 14, 2020, 11:09 AM), https://scroll.in/latest/961896/please-take-my-money-vijay-
mallya-urges-centre-to-drop-charges-against-him [https://perma.cc/GC7V-EFF9] [herein-
after Please Take My Money].
4. Kaye Wiggins, 'King of Good Times' Says He's Lightning Rod for PublicAnger, BLOOM-
BERG (July 2, 2019, 9:01 AM), https://www.bloomberg.com/news/articles/2019-07-02/-
king-of-good-times-says-he-s-lightning-rod-for-public-anger [https://perma.cc/4EYR-B927].
While Mr. Mallya has hardly been contrite while fighting extradition, he has recognized
that he is viewed as the face of India's debt resolution problems. Id. "I've been deliber-
ately set up as the lightning rod of public anger at India's bad debts," he said. Id. On
Twitter, he has often claimed that he has offered to repay the entire principal balance of
Kingfisher's loans, but that the banks have refused to accept the money. Please Take My
Money, supra note 3.
5. BANKR. LAw REFORMS COMM., THE REPORT OF THE BANKRUPTCY LAw REFORMS COM-
MiTTEE-VOLUME I: RATIONALE AND DESIGN 18 (Nov. 2015) [hereinafter BANKRUPTCY LAw
REFORMS COMMITrEE REPORT] (internal citations omitted).
2020] Racing to Resolution 395
6
doing business rank was 134th of the 189 countries analyzed. The
issue was not growth. In fact, India's GDP growth was 6.39% in
2013, and trending upward to 7.41% in 2014.7 The problem was
non-performing corporate debt, much of it held by state-owned
banks. 8 More precisely, it was the challenge in collecting that debt
from defaulting borrowers. Among the subcategories that make
up Doing Business, India ranked 121st in insolvency resolution and
186th in contract enforcement. 9 India's low overall ranking was
driven significantly by the problems in India's debt resolution pro-
cess, or more accurately, processes.
Bad debt collection involved a hodgepodge of laws-neither uni-
formly enforced nor entirely consistent. 10 The process was frag-
mented to say the least. Different fora were involved: sometimes
courts, sometimes tribunals, sometimes both. Creditors turned to
one set of statutes while debtors turned to another, sometimes
11
resulting in two fora deciding issues related to the same debt.
Inconsistent results led to frequent appeals and long delays. Debt-
ors were able to stonewall collection efforts for many years, with
little left for creditors at the end. The average time for a creditor
12
to recover on a defaulted loan was 4.3 years. At the end of this
protracted process, the average recovery was only 25.6 cents on the
6. WORLD BANK, DOING BUSINESS 2014-ECONOMY PROFILE: INDIA 5 (11th ed. 2013)
[hereinafter 2014 INDIA REPORT]; WORLD BANK, DOING BUSINESS 2014: UNDERSTANDING
REGULATIONS FOR SMAIL AND MEDIUM SIZE ENTERPIUSES 198 (11th ed. 2013) [hereinafter
2014 WORLD REPORT]. These annual reports measure the legal environment in each
reported country relative to how conducive that environment is to starting and maintain-
ing a business. 2014 INDIA REPORT, supra note 6, at 5; 2014 WORLD REPORT, supra note 6, at
1-2. The reports present both a score and a ranking derived from the scores on ten topics
(e.g., resolving insolvency). 2014 INDIA REPORT, supra note 6, at 5; 2014 WORLD REPORT,
supra note 6, at 2. A country's score benchmarks its economy relative to best practices.
2014 INDIA REPORT, supra note 6, at 5. Rankings compare economies. Id. The methodol-
ogy and data sources used to create the reports are discussed more fully in Part III.
7. DataBank: World Development Indicators, WORLD BANK, https://databank.worldbank.
org/source/world-development-indicators# [https://perma.cc/N6Y9-7CHZ] (last visited
Aug. 16, 2020). Since 2010, India's GDP growth had ranged between 5.02% and 8.50%.
Id.
8. Tao Zhang, Deputy Managing Dir., Int'l Monetary Fund, Remarks at the National
Stock Exchange of India and International Monetary Fund Seminar on Finance and
Fintech: Invigorating Investment and Inclusion in India (Mar. 12, 2018).
9. 2014 INDIA REPORT, supra note 6, at 91, 102.
10. BANKRUPTcY LAw REFORMS COMMITTEE REPORT, supra note 5, § 3.1, at 18.
11. Id. § 3.3.1, at 25.
12. 2014 INDIA REPORT, supra note 6, at 102. The best performer was Ireland, with an
average resolution time of 0.4 years. Id. at 13. The average resolution time in the United
States was 1.5 years. 2014 WORLD REPORT, supra note 6, at 233.
dollar.1 3 Both benchmarks were exceptionally poor by world

standards.
The issues with collection were well-known for many years. In
2004, the Heritage Foundation/Wall Street Journal Index of Eco-
nomic Freedom described the backdrop for India's property rights
score:
Protection of property rights is applied unevenly in India. The
Economist Intelligence Unit reports that "large backlogs create
delays-sometimes years long-in reaching decisions. Conse-
quently, foreign corporations often include clauses for interna-
tional arbitration in their contracts." According to the U.S.
Department of State, "Critics say that liquidating a bankrupt
company may take as long as 20 years." Protection of property
for local investors, particularly the smallest ones, is weak. 14
Recognizing this significant impediment to domestic lending
and foreign investment, as well as long-term macroeconomic
growth, 15 the government responded. Prime Minister Narendra
Modi set an ambitious goal: India would break into the top fifty of
the World Bank rankings within three years. 16 One of the govern-
ment's chief initiatives to achieve this goal was the development of
a comprehensive insolvency resolution process. Speed was the
order of the day-speed in passing reforms and speed in putting
money back in creditors' pockets.
13. 2014 INDIA REPORT, supra note 6, at 13. Japan's recovery rate was the highest, with
an average of 92.8 cents on the dollar. Id. The average recovery in the United States was
81.5 cents on the dollar. 2014 WORLD REPORT, supra note 6, at 233.
14. Kevin E. Davis, What Can the Rule ofLaw Variable Tell Us About Rule of Law Reforms?,
26 MICH. J. INT'L L. 141, 154 (2004) (quoting the Index).
15. Dr. T.K. Viswanathan, Chairman of the Bankruptcy Law Reforms Committee,
acknowledged in the Committee's initial Report:
This is a matter of critical importance: India is one of the youngest republics in
the world, with a high concentration of the most dynamic entrepreneurs. Yet
these game changers and growth drivers are crippled by an environment that
takes some of the longest times and highest costs by world standards to resolve
any problems that arise while repaying dues on debt. This problem leads to grave
consequences: India has some of the lowest credit compared to the size of the
economy. This is a troublesome state to be in, particularly for a young emerging
economy with the entrepreneurial dynamism of India. Such dynamism not only
needs reforms, but reforms done urgently.
BANKRUPTcY LAw REFORMS COMMITTEE REPORT, supra note 5, § 1, at 7.
16. Modi's Target to Put India in the Top 50 in 'Ease-Of-Doing-Business'a Pipedream?,
MONEYLIFE (Sept. 25, 2014), https://www.moneylife.in/article/modis-target-to-put-india-
in-the-top-50-in-ease-of-doing-business-a-pipedream/38902.html [https://perma.cc/KG7A-
52LG]; see also English Renderingof PrimeMinister Shri NarendraModi's Address at the Launch of
Make in India' Global Initiative, MINISTRY ExTERNAL AFF. GOV'T INDIA (Sept. 26, 2014),
https://www.mea.gov.in/Speeches-Statements.htm?dtl/24033/English+render-
ing+of+Prime+Minister+Shri+Narendra+Modis+address+at+the+aunch+of+
Make+an+India+global+initiative [https://perma.cc/82FR-A8P5].
The pace at which India undertook studies, drafted, modified,

and passed comprehensive legislation through a bicameral legisla-
ture, and enacted the final product into law, was remarkable. This
is especially true given that it was created almost from whole cloth,
and superseded dozens of laws. In late 2014, the Ministry of
Finance appointed the Bankruptcy Law Reforms Committee,
charged with identifying problems and proposing a comprehensive
code to supersede the current system. The Committee's initial
report was published in February 2015,17 with the final report and
a draft bill delivered in November 2015.18 The bill was introduced
in the Lok Sabha the next month, and then referred to a joint
committee with the Rajya Sabha.19 The joint committee further
analyzed the draft bill and considered testimony and public com-
ments, and issued its final report in April 2016.20 A modified bill
was passed by Parliament in May, received presidential assent on
May 28, 2016, and the Insolvency and Bankruptcy Code, 2016
(IBC) became law later that year. The entire process lasted around
a year and a half. Imagine deciding one day to overhaul the
United States' health care laws, and enacting a comprehensive
code governing all aspects of the system eighteen months later.
The IBC is imbued with a sense of urgency and makes clear that
creditors are in control. Within two weeks of a bankruptcy applica-
tion being accepted by the tribunal, an independent resolution
professional is appointed, and management is removed. The
board of directors is suspended, and equity loses any voice in the
affairs of the company. All employees report to the resolution pro-
fessional, who makes all day-to-day decisions. A creditor committee
is formed shortly thereafter and takes control: the committee
makes all major decisions and the resolution professional primarily
17. BANKRUPTCY LAw REFORMS COMMITTEE REPORT, supra note 5.

18. BANKR. LAw REFORM COMM., THE INSOLVENCY AND BANKRUPTCY BILL (2015),
https://dea.gov.in/sites/default/files/DraftInsolvencyBankruptcyBil2Ol5.pdf.
19. See Vijay Jaiswal, Law Making Process in Indian Parliament, IMPORTANT INDIA (Aug.
28, 2013), https://web.archive.org/web/20170906084119/http://www.importantindia.
com:80/2096/procedure-of-law-making-in-indian-parliament/. India's legislative body is a
bicameral parliament comprised of the Lok Sabha and the Rajya Sabha. Indian Parliament,
NAT'L PORTAL INDIA, https://www.india.gov.in/my-government/indian-parliament [https:
//perma.cc/SMZ3-WBVG] (last visited Aug. 16, 2020). After passage by the Parliament, a
bill is sent to the President for assent. Jaiswal, supra note 19. If assent is given, the bill
becomes law as of the date designated by the government, although Indian law first
requires notice to be published in the Official Gazette. See id.
20. LOK SABHA SECRETARIAT, REPORT OF THE JOINT COMMITTEE ON THE INSOLVENCY
AND BANKRUPTCY CODE, 2015-SIXTEENTH LOK SABHA (Apr. 2016), https://ibbi.gov.in/
16JointCommittee onInsolvencyand_BankruptcyCode_2015_1 .pdf.
compiles financial information, solicits buyers for the company,

and shepherds the process to an expedited resolution. 21
Gone are the days of years-long cases and languishing dockets.
The IBC requires that a resolution plan be approved by creditors
within six months-a far cry from the 4.3-year average under the
former system. Failing that, the debtor is immediately moved into
liquidation, even if against the creditors' wishes. 22 Although credi-
tors may vote to extend the resolution period once, and for no
more than ninety days, 23 creditors may also vote to liquidate the
debtor at any time. 24 Not all creditors are treated equally under
the IBC. The creditors with the power to make decisions are gen-
erally limited to lenders, not all creditors. Vendors and employees
have little voice. 25
The IBC funnels all bankruptcy cases into specialized tribunals,
rather than courts, 26 although National Company Law Tribunals
(NCLTs) essentially function as trial courts. Decision-making by
these tribunals is largely limited to ensuring that creditor commit-
tee choices do not conflict with the IBC. 27 The appellate process
likewise is streamlined. Unlike the old system, there is now one silo
for all appeals. NCLT decisions may be appealed to the National
Company Law Appellate Tribunal (NCLAT), which is also not a
court. Parties do eventually reach a court as the final level of
appeal is to the Indian Supreme Court.2 8
21. Insolvency and Bankruptcy Code, No. 31 of 2016, INDIA CODE (2016), §§ 16-32.
22. Id. §§ 12(1), 33.
23. Id. § 12(2)-(3).
24. Id. § 33(2).
25. The IBC differentiates between "financial creditors" and "operational creditors."
Id. § 5(7), (20). Financial creditors are lenders, while operational creditors are generally
vendors and service providers. Id. Chief among the greater rights afforded to financial
creditors is the right to sit on the creditor committee, which makes all major decisions. Id.
§ 21. It is also easier for a financial creditor to initiate the bankruptcy process. Id. §§ 7, 8.
This disparate treatment has already been challenged at least once and was found to be
constitutional. AkshayJhunjhunwala v. Union of India, W.P. No. 672 of 2017, Calcutta HC.
26. Insolvency and Bankruptcy Code §§ 63, 231.
27. Suman K. Jha, Bankruptcy Code CanPush GDP by 2%, Says M S Sahoo, BW BUSINESS-
woRLD (Apr. 22, 2017), http://www.businessworld.in/article/Bankruptcy-Code-Can-Push-
GDP-By-2-Says-M-S-Sahoo/22-042017-116837 [https://perma.cc/VRU2-NUXK] ("The
entire process is under [creditor] control. They go to the National Company Law Tribunal
(NCLT) for an approval. The NCLT ascertains if the resolution plan meets the specified
requirements. It also verifies if due process has been followed. It does [not] make a sec-
ond guess on merits. Merit is the stakeholder's responsibility.").
28. Insolvency and Bankruptcy Code §§ 60-62.
2020 ] Racing to Resolution 399
So why is this important to those of us in the United States, half a

world away? First, in an increasingly globalized economy, 29 it is
impossible to be completely insulated from economic events in a
country with a population of almost 1.4 billion people. Second,
India is an important trading partner of the United States. In
2016, over 16% of India's exports came to the United States and
6.4% of its imports came from the United States, first and second
respectively. 30 This is especially important given the current lack of
a mechanism in the IBC for dealing with cross-border insolvencies.
The rights of cross-border lenders, vendors, and even workers are
somewhat undefined under the current structure. Finally, this new
system warrants study because it is so radically different from the
United States in terms of its goals. Although some would disagree
with this statement in both countries, bankruptcy law in the United
States is primarily focused on rehabilitating debtors, 31 while bank-
32
ruptcy law in India is now clearly focused on assisting creditors.
This Article is not intended to be normative in any way and
makes no argument that U.S. policy on insolvency issues is superior
to the new Indian model. The United States Bankruptcy Code
(USBC) 33 is a tool to solve a collective action problem by forcing all
creditors to negotiate with debtors at the same time in a transpar-
ent way, rather than dismantling debtors through a race to the
courthouse. But the U.S. model assumes a functioning collection
system outside of bankruptcy, which India did not have. In
responding to a different set of circumstances, Indian lawmakers
chose to make a dramatic change that may be right for them. The
focus here, after comparing the systems, is to analyze the prelimi-
nary data to determine whether the IBC has moved the needle rel-
ative to the stated goals of the Ministry of Finance. This Article will
leave it to others to judge the normative impact in achieving those
goals. Additionally, this Article will not determine whether, if the
29. For example, IBM now has more employees in India than in the United States. See
Vindu Goel, IBM Makes a Big Bet on India, N.Y. TIMES, Oct. 1, 2017, at BUI.
30. In 2016, the United States imported from India over $46 billion of goods and
exported over $21.5 billion. Country Fact Sheet: India, U.S. INT'L TRADE ADMIN., https://
tpis2.trade.gov/TPISPUBLIC/tpisctyreportdyn.aspx [https://perma.cc/HQJ8-A2C7]
(last visited Aug. 16, 2020).
31. See Rafael La Porta et al., Law and Finance, 106 J. POL. ECON. 1113, 1138 (1998)
("The United States is actually one of the most anticreditor common-law countries ... .").
32. Chitra Sharma v. Union of India, (2017) W.P. (Civil) No. 744, 1 26 (India) ("The
IBC reflects a fundamental shift from a 'debtor in possession' to a 'creditor in possession.'
The resolution process is market driven.").
33. 11 U.S.C. §§ 101-1532 (2018).
IBC is effective, bits and pieces of it might further inform thinking

in the United States.
This Article analyzes the IBC, how well it is working relative to
the government's stated goals, and how it differs from U.S. law in
practice and its policy aims. 34 This Article examines only corporate
debtors, and further excludes troubled financial firms, which are
not governed by the IBC.3 5
Further, other than the excellent articles by Adam Feibelman
written both before and after passage of the IBC,3 6 there are few
U.S. academic studies related to the passage of the IBC or its effi-
cacy in achieving the stated goals of the Indian government. In
addition, Professor Feibelman's efforts focus largely on the con-
sumer aspects of the IBC, whereas this Article focuses exclusively
on corporate bankruptcies. This Article does not attempt to reach
definitive conclusions, both because the data are so limited due to
the infancy of the law and because the early numbers are likely
skewed due to significant start-up issues discussed in Part III.
34. A note about nomenclature is important here. In the United States, successful
chapter 11 cases are generally referred to as "reorganizations," and this is the term used
here when discussing U.S. law. The Insolvency and Bankruptcy Code, 2016 (IBC) uses the
term "resolutions" to refer to corporate debtors who confirm a plan and emerge from
bankruptcy as a going concern (albeit with different ownership), and this is the term used
here when discussing the IBC. Both countries use the term "liquidation(s)" to refer to the
sale, usually piecemeal, of a debtor's assets by a court-appointed neutral.
35. Insolvency and Bankruptcy Code, No. 31 of 2016, INDIA CODE (2016), § 3(7).
Bank failures were to be governed by a different set of laws, embodied in the proposed
Indian Financial Code. INDIAN FINANCIAL CODE BILL 17 (2015), https://www.prsindia.org/
uploads/media/draft/Draft-%20Indian%2Financial%2OCode,%202015.pdf [https://
perma.cc/HV7K-DNA4] [hereinafter IFC]. The IFC was proposed as part of the same
round of financial reforms that led to passage of the IBC. The IFC had its roots in the
Financial Sector Legislative Reforms Commission, also formed by the Ministry of Finance
to draft a series of new laws or amendments to safeguard the financial system and
encourage market access. See FIN. SECTOR LEGISLATIVE REFORMS COMM'N, REPORT OF THE
FINANCIAL SECTOR LEGISLATIVE REFORMS COMMISSION-VOLUME I: ANALYSIS AND RECOMMEN-
DATIONS 70 (Mar. 2013), https://dea.gov.in/sites/default/files/fslrcreportvolli .pdf.
The IFC was to govern many aspects of India's financial institutions, including consumer
protection, capital controls, financial inclusion, market development, and regulatory archi-
tecture, as well as a resolution mechanism when financial firms fail. IFC, supra note 35,
pmbl., pts. VII, X. The IFC was never passed, but certain aspects of it were enacted
through less comprehensive statutes. Ila Patnaik, ReimaginingFinancialReforms in India, 10
Years After GreatRecession, LIvEMINT (Sept. 17, 2018, 11:17 AM), https://www.livemint.com/
Money/ZmtUjOU9aALwzNy33BpR6J/Great-Recession-2008-financial-crisis-Lehman-Broth-
ers-RBI-In.html [https://perma.cc/K7UN-6CDV]. To date, no bank insolvency resolution
mechanism has been enacted. Id.
36. Adam Feibelman, Legal Shock or False Start: The UncertainFuture of India's New Per-
sonal Insolvency and Bankruptcy Regime, 93 AM. BANKR. L.J. 429, 429 (2019) [hereinafter
Feibelman, Legal Shock or False Start]; Adam Feibelman, ConsumerFinance and Insolvency Law
in India: A Case Study, 36 BROOK. J. INT'L L. 75, 80-81 (2010).
20201 Racing to Resolution 401
Instead, this Article will serve as a baseline and set the stage for
further studies, once the IBC has matured and the data have
stabilized.
This Article is divided into two parts. Part II, mainly descriptive,
is a comparison of the IBC and the USBC, and why the systems'
differences are important in construing the data and informing
normative judgments about what a bankruptcy code should priori-
tize. Part II highlights the major components of the IBC, with a
focus on the IBC's emphasis on speed in either rehabilitating or
liquidating financially troubled companies and creditor control
once a bankruptcy application is admitted.3 7
Part III is empirical, and focuses solely on the IBC and how well
it is working relative to India's goals. Part III uses data compiled
through March 31, 2019 (unless otherwise noted), which are lim-
ited at this point due to the youth of the IBC. 38 The data are
divided into two subparts: perceived and actual. 39 The perceived
data are drawn largely from non-governmental organization
reports, mainly the World Bank and the International Monetary
Fund. Those reports reflect a dramatic rise in the overall scores
and rankings, but little movement in the Resolving Insolvency com-
ponent. The World Bank reports that case lengths and recovery
rates remain essentially unchanged. Part III shows that the Doing
Business data are misapplied in some areas and incorrect in others.
37. The admission of a bankruptcy application is a significant event under the IBC,
even when the debtor files voluntarily. Application must be made, documents submitted
and analyzed, and an evidentiary determination made before the debtor is "in bank-
ruptcy." See generally, Insolvency and Bankruptcy Code §§ 7-11. This takes weeks. See id.
For a more extensive analysis, see infra Part III. In voluntary cases in the United States, a
debtor simply files its petition and the bankruptcy case begins immediately. 11 U.S.C.
§ 301. Little more is required than Michael Scott's famous: "I declare bankruptcy!" The
Office: Money (NBC television broadcast Oct. 18, 2007).
38. The most recent WB India Report analyzed herein is the 2019 report, which was
released on October 31, 2018. WORLD BANK, DOING BUSINESS 2019-ECONOMY PROFILE:
INDIA (16th ed. 2018) [hereinafter 2019 INDIA REPORT]. Although outside the data set of
this Article, the 2020 India Report has now been released. WORLD BANK, DOING BUSINESS
2020-ECONOMY PROFILE: INDIA (2020) [hereinafter 2020 INDIA REPORT]. Some of the
overly consistent results that support the criticisms contained in this Article of the Doing
Business methodology changed in the 2020 India Report.
39. The use of these terms does not imply a pejorative connotation to the perceived
data. Instead, the intent is to be descriptive in drawing a distinction between what the
important numbers show thus far (i.e., case length and recovery rates), and how the World
Bank and others expect bankruptcy cases (and consequently the numbers) to move now
that the IBC is in effect. As detailed in Part III, the World Bank's DoingBusiness reports are
grounded largely in estimates from practitioners based on hypothetical scenarios, hence
the term "perceived data." See infra Part III. The actual data are reported data points from
completed IBC cases.
As a result, the Doing Business reports underappreciate the IBC's

achievements.
The actual data drawn from Indian governmental reports tell a
more accurate story. 40 That data show that liquidation remains the
norm thus far, but case lengths have shortened dramatically.
Recovery rates are much higher for resolutions than reported by
Doing Business, but unknown (because unreported) for liquida-
tions. Using the same governmental data plus the cases interpret-
ing the nascent law, Part III further discusses why the numbers may
be skewed at this early stage, due to the initial need to liquidate
hordes of "zombie" companies that have been troubled for many
years (thus depressing average recovery rates, especially with such a
small sample size) and to the resolution of numerous bankruptcy
eligibility disputes and the attendant delays while those disputes
percolated through the levels of appeal (thus lengthening average
case life). Coming full circle to the goals of the IBC, Part III shows
that commercial lending has increased since the IBC became law,
and banks' non-performing assets have peaked and are trending
downward. As with any comprehensive legislation, especially when
enacted so quickly, there were oversights and overreaches.4 1 Part
III discusses how quickly some of those have been identified and
remedied and concludes with a summation of the trends, calls for
further study once the data have stabilized, and notes the contin-
ued absence of a reciprocal cross-border insolvency mechanism in
the IBC.
40. The reports themselves are an important advancement. One problem under the
old system was the lack of access to case data. See BANKRUrTCY LAw REFORMS COMMITTEE
REPORT, supra note 5, at 38. The IBC has begun to remedy this somewhat with the creation
of information utilities to collect and disseminate information regarding every corporate
debtor's finances. Insolvency and Bankruptcy Code §§ 209-16. In addition, each
appointed insolvency professional is required to provide copies of all proceedings to the
Insolvency and Bankruptcy Board of India (IBBI). Id. § 208(2) (d). The IBBI then com-
piles the results in publicly available quarterly reports. See, e.g., Shepherding Valuation Profes-
sion, INSOLVENCY & BANKR. NEws (Insolvency & Bankr. Bd. of India, New Delhi, India),
Oct.-Dec. 2018, at 14, 14-18. That said, specificity is currently lacking in several areas that
are important to fully understanding the impact of the new law. See Adam Feibelman
&
Renuka Sane, A Maximalist Approach to Datafrom India's New Insolvency and Bankruptcy System
(Tulane Pub. Law Research Paper No. 19-4, 2019), https://papers.ssm.com/sol3/
papers.cfm?abstractid=3311195.
41. For example, the IBC required 75% approval from the members of the creditor's
committee to act. Insolvency and Bankruptcy Code § 56.2. The second round of amend-
ments to the IBC lowered the approval threshold to 66% for resolution plan approval, and
51% for routine decisions. Insolvency and Bankruptcy Code (Second Amendment) Act,
No. 26 of 2018, INDIA CODE (2018), §§ 8, 15, 16, 20, 21, 23, 25 [hereinafter IBC Second
Amendment].
II. A COMPARISON WITH THE USBC

To appreciate the unique features of the IBC, it is helpful to see
how it compares to the USBC. The comparison is useful for two
reasons. First, U.S. bankruptcy practitioners are familiar with the
USBC, which has been well-established for decades.4 2 The IBC is
in its infancy. Highlighting some of the similarities, differences,
and areas where each code has no counterpart in its comparator
illustrates the objectives and priorities for each country. Second,
many of India's reforms were, and remain, driven by a desire to
improve in the Doing Business rankings. The United States cur-
rently enjoys a world ranking of third in Resolving Insolvency."
Half of that score comes from the World Bank's strength of insol-
vency framework index, a measure of how closely bankruptcy codes
align with internationally recognized best practices. The USBC
had an index score of fifteen of a possible sixteen in 2019." No
country was higher.4 5 The IBC had an index of 8.5 (although, as is
argued below, it should have been higher)." While the World
Bank rankings are important to India, a comparison with the
United States' highly-ranked code shows that in some areas India
prioritized other objectives more, namely enhancing creditors'
rights.
Creditor control is a hallmark of the new law. The IBC gives
creditors the right to name the insolvency professional who will
run the debtor's day-to-day operations (management is immedi-
ately out) and solicit buyers for the company. Financial creditors
have the right to vote on every proposed plan and a plan can only
be confirmed with their approval. As notable as creditor control is
the speed at which the case must progress. A plan must be
approved within 180 days (or 270 days, but only if the creditors
approve the extension), and the entire resolution process must be
completed within 330 days. Missing a deadline leads to immediate
liquidation, which the creditors also have the right to demand at
any time.
42. See William W. Bratton & David A. Skeel, Jr., Bankruptcy'sNew and Old Frontiers, 166
U. PA. L. REv. 1571 (2018) (providing a history of the evolution of the U.S. Bankruptcy
Code (USBC)).
43. WORLD BANK, DOING BUSINESS 2019: TRAINING FOR REFORM 212 (16th ed. 2019)
[hereinafter 2019 GLOBAL REPORT].
44. Id. at 212.
45. Id. at 152-215. Five other countries also scored a fifteen on the index but all had
a lower overall Resolving Insolvency score than the United States. Id.
46. 2019 INDIA REPORT, supra note 38, at 97, 101; see discussion on the index and
India's 2019 score infra Part III.A.1.
This Part begins with how the codes are alike, at least in terms of
basic underpinnings such as a stay of collection activities, property
of the bankruptcy estate, and creditor voting. It then highlights
areas where each code has no matching provision, or even con-
cept. For instance, the IBC created a powerful administrative
agency to oversee and regulate the area of bankruptcy, while the
United States has no regulatory counterpart. The USBC has an
entire chapter devoted to cross-border insolvencies, while the IBC
has only two provisions and neither have been fully enacted yet.
This Part then discuss the major ways that the codes contrast, both
in concept and practice, focusing on control of the debtor and the
case, as well as showing the myriad ways creditors are in control
under the IBC while management remains in control in the United
States.
A. ParallelStructures With Distinctive Details
The similarities between the IBC and the USBC are mainly struc-
tural. The codes' processes are not identical, but in many respects
they parallel. Both codes provide for a stay of most outside collec-
tion actions during the bankruptcy case. Both provide for the
assemblage and preservation of the debtor's assets. Both impose
time limits on reorganization efforts, although for different peri-
ods and with different consequences if those efforts fail. Both
direct that a plan be formulated and presented to creditors. Credi-
tors vote on proposed plans in both systems, and no plan can be
approved without the approval of at least some creditors. 4 7 In liq-
uidations, both codes provide for an independent neutral to sell
assets and administer claims. To some extent, both codes provide
for an equality of distribution to similarly situated creditors,
although the claim groupings and priority waterfalls are different.
Lawmakers in both countries have recently made it easier for small
businesses to navigate the process. Extra-statutory rulemaking is
allowed in both countries. But even in the structural parallels, the
details differ greatly.
One of the most sacrosanct principles of U.S. bankruptcy law is
the automatic stay. The stay freezes most collection efforts to
ensure a parity of recovery by creditors in both reorganizations and
liquidations. 4 8 In chapter 11 cases, it also allows the debtor a
47. There is a new limited exception to this rule for small business debtors in the
United States. See Small Business Reorganization Act of 2019, Pub. L. No. 116-54, § 1191,
133 Stat. 1079 (2019).
48. 11 U.S.C. § 362(a) (2018).
2020]1 Racing to Resolution 405
breathing spell to formulate a plan. The IBC includes a similar

provision, known as the "moratorium." 49 The IBC moratorium is
stronger than the USBC automatic stay in two regards. First, sec-
tion 362(b) of the USBC lists dozens of proceedings and enforce-
ment actions where the automatic stay is inapplicable. 50 So far,
there are only three exceptions to the IBC moratorium. 51 Second,
the IBC has no provision for a creditor to seek relief from the mor-
atorium, while those motions are routinely filed in the United
States. 5 2 The U.S. model does, however, have a quicker trigger for
applicability. The automatic stay goes into effect immediately
upon the filing of a bankruptcy petition. 5 3 The moratorium goes
into effect only after an application has been admitted, which is
weeks after the application is filed. 5 4
Implicit in both codes is an understanding that a bankruptcy
process can only be effective if almost all the debtor's assets are
included in that process. Property of the bankruptcy estate is a
broad concept under both codes, and both provide mechanisms
for its recovery from third parties. The USBC begins with the pre-
mise that the estate is comprised of all of the debtor's legal and
equitable interests, "wherever located and by whomever held," and
then goes on to narrowly define those few interests not included. 55
If property of the estate is not in the debtor's possession, the pos-
sessor must turn it over to the debtor. 5 6 The property of the estate
concept is just as broad under the IBC 57 and includes similar turn-
over powers. 58
49. Insolvency and Bankruptcy Code, No. 31 of 2016, INDIA CODE (2016), § 14.
50. 11 U.S.C. § 362(b).
51. The moratorium does not apply to criminal proceedings. Shah Bros. Ispat Private
Ltd. v. P. Mohanraj, Company Appeal No. 306 of 2018, 1 6, NCLAT, New Delhi (July 31,
2018), https://ncat.nic.in/?page-id=123. The same is true in the United States. See 11
U.S.C. § 362(b)(1). The IBC was recently amended to make clear that assets of a debtor's
sureties and guarantors are likewise not protected. Insolvency and Bankruptcy Code
§ 14(3). Finally, the moratorium "shall not apply to such transactions as may be notified by
the Central Government in consultation with any financial sector regulator." Id. At time
of writing, there has been no known instance where this last exception has been invoked,
but it is rather broad, especially given that the state is both the financial sector regulator
and the owner of a majority of Indian banks.
52. 11 U.S.C. § 362(d).
53. 11 U.S.C. § 362(a).
54. Insolvency and Bankruptcy Code § 14(1); see discussion on application admission
process infra Part II.C.
55. 11 U.S.C. § 541; see also 11 U.S.C. § 1115 (specific to chapter 11 cases).
56. 11 U.S.C. §§ 542-43, 1107(a).
57. Insolvency and Bankruptcy Code §§ 3(27), 36 (regarding liquidation property of
the estate).
58. Id. §§ 18(f), 25.
The drafters of both codes recognized that bankruptcy should

be a way station, not a destination. Both codes include chapters for
reorganization/resolution (the preferred method) and liquida-
tion. If a plan is to be approved, both require that approval within
a certain period of time: no more than nine months in India, and
59
no more than twenty months in the United States. Plans are
ostensibly presented by the debtor under both codes, but the
actual plan proponents are quite different. 60 For plan approval,
both provide for creditor voting, but diverge greatly on who has
voting rights and the power of those rights. 61 Under both systems,
confirmed plans are binding on the debtor, all creditors, and all
other entities. 6 2
In liquidations, both codes provide for the appointment of a dis-
interested insolvency professional. 63 Those professionals are
charged with collecting and liquidating the debtor's assets, examin-
64
ing claims against the debtor, and making distributions.
Conceptually, both codes mandate some form of pro rata distri-
bution to like creditors. For a plan to be approved, both codes
require that dissenting creditors receive at least as much as they
would have received in a liquidation. 65 Both also require that simi-
larly situated creditors receive the same treatment, even though
the priority and grouping of claims is markedly different under the
two codes. 66
In both systems, a debtor's preferential treatment of some credi-
tors is corrected through avoidance actions to recover pre-bank-
ruptcy transfers. 67 For most creditors, the USBC allows for a
ninety-day lookback period while the IBC allows up to a year. The
USBC extends that period up to a year for insiders, the IBC for up
to two years. 68 Both also include provisions to reverse transfers that
59. 11 U.S.C. § 1121(d); Insolvency and Bankruptcy Code § 12; see discussion on dif-
ferences in deadlines and consequences for missing the deadlines infra Part II.C.
60. 11 U.S.C. § 1121(a); Insolvency and Bankruptcy Code § 25; see discussion on dif-
ferences between plan proponents infra Part II.C.
61. See discussion on differences in voting infra Part II.C.
62. 11 U.S.C. § 1141; Insolvency and Bankruptcy Code § 31.
63. 11 U.S.C. § 701; Insolvency and Bankruptcy Code § 34. In the United States, cor-
porate debtors are sometimes able to self-liquidate in chapter 11. Matter of Sandy Ridge Dev.
Corp., 881 F2d. 1346, 1352 (5th Cir. 1983).
64. 11 U.S.C. § 704; Insolvency and Bankruptcy Code §§ 35-41.
65. 11 U.S.C. § 1129(a) (7) (A); Insolvency and Bankruptcy Code § 30(2)(b) (provid-
ing a best interest test for dissenting financial creditors and all operational creditors).
66. 11 U.S.C. §§ 507, 1122(a), 1123(a) (4); Insolvency and Bankruptcy Code § 53; see
discussion on differences in priority and grouping infra Part II.C.
67. 11 U.S.C. § 547(b)(1); Insolvency and Bankruptcy Code §§ 43-44.
68. 11 U.S.C. § 547(b)(4); Insolvency and Bankruptcy Code § 43(4).
were outright fraudulent, as well as some deals that were simply

bad for the debtor. 69 India also allows creditors to bring those
claims. 70
Both countries have recently made it easier for small businesses
to reorganize. The USBC has been amended to make the process
cheaper for small businesses, as well as more-debtor friendly.
Although small business provisions were already sprinkled
throughout chapter 11, a new subchapter has been added that
repealed and replaced many of the small business provisions and
added new ones. Small business debtors are no longer saddled
with the expense of preparing a disclosure statement and seeking
its approval. 7 1 Likewise, competing plans are now barred and cred-
itor committees are generally prohibited. 72 The absolute priority
rule no longer applies to small business cases and has been
replaced by an easier confirmation standard for these debtors. 73
Small business cases have even moved more toward the chapter 13
model in one important respect-a debtor can confirm a plan
without the approval of any creditors so long as the debtor com-
mits all of its projected disposable income to the plan. 74
India has also recognized the importance of small businesses to
its economy and the challenges in successfully reorganizing those
businesses, referred to as Micro, Small, and Medium Enterprises
(MSMEs).75 In the second amendment to the IBC, Parliament
made it easier for MSMEs to navigate the process. First, lawmakers
recognized that there simply were not that many buyers for
MSMEs. Institutional investors might bid for larger companies, but
few small investors had the sophistication or capital to navigate the
IBC process. Further, the prohibition against prior defaulters shut
the current owners out of the process. 7 6 Some small businesses are
69. 11 U.S.C. § 548(a)(1)(A); Insolvency and Bankruptcy Code §§ 45-49.

70. Insolvency and Bankruptcy Code § 47.
71. 11 U.S.C. § 1181(b).
72. See id. §§ 1181(a)-(b), 1189(a).
73. Id. § 1181(a).
74. Id. § 1191(c) (2) (A).
75. During the 2015-16 period, small businesses in India employed over 110 million
people and contributed approximately 29% of India's GDP. See MINISTRY OF MICRO, SMALL
& MEDIUM ENTERs., GOv'T OF INDIA, ANNUAL REPORT 2017-18, at 22, 28 (2018). They are
referred to as "Micro, Small, and Medium Enterprises" (MSMEs) and defined in the IBC as
all businesses in the manufacturing sector with an investment of up to X10 crore (approxi-
mately $1,443,400) in machinery and equipment, and in the service sector an investment
of up to 5 crore in equipment Insolvency and Bankruptcy Code § 240A (incorporating
§ 7(1) of The Micro, Small and Medium Enterprises Development Act, 2006, No. 27, Acts
of Parliament, 2006 (India)).
successful only if the person who built the business continues to

run it. To maximize the chances for a reorganization, the prohibi-
tion against prior defaulters was lifted for MSMEs. 77 Second, the
Central Government now has the power to direct that any provi-
sion of the IBC be modified or simply not apply to MSMEs. 78
Rather than try to anticipate every contingency and provide for
every procedure in the codes, lawmakers in both countries partially
delegated rule-making powers. In the United States, the Supreme
Court has the "power to prescribe by general rules, the forms of
process, writs, pleadings, and motions, and the practice and proce-
dures in cases under [the USBC]."79 The Court promulgates and
maintains both the Federal Rules of Bankruptcy Procedure and the
Official Bankruptcy Forms. 80 Updates to the rules and the forms
take effect on December 1 of each year unless Congress passes a
law providing otherwise. 81 India does it virtually the same way: the
"Central Government" has the power to make rules and the Insol-
vency and Bankruptcy Board of India has the power to make regu-
lations. 82 Every rule and regulation is presented to both Houses of
Parliament, who have thirty days to object or modify the proposed
rule or regulation before it takes effect.83 Like in the United
States, rules or regulations cannot trump statutes. 8 4
B. The Unique Concepts
Each code has provisions that have no counterpart in the other

code. These unique concepts largely center around how claims are
grouped (and therefore paid), regulation of the system, and con-
trol of the debtor and the process. One country has adopted the
model law for dealing with cross-border insolvencies while the
other continues to debate it. These could be categorized as differ-
ences between the two systems, and they are, but highlighting a few
of these unique provisions lays the groundwork for showing the
more profound differences.
77. Id. § 240A.

78. Id.
79. 28 U.S.C. § 2075 (2018).
80. FED. R. BANKR. P. 1001.
81. See 28 U.S.C. § 2075.
82. Insolvency and Bankruptcy Code §§ 239, 240 (providing a non-exclusive list of
forty areas where rules may be made and a non-exclusive list of eighty-one areas to be
regulated, respectively).
83. Id. § 241.
84. See Cent. Bank of India v. Resolution Prof'l of the Sirpur Paper Mills Ltd., Com-
pany Appeal No. 526 of 2018, 1 8, NCLAT, New Delhi (Sept. 12, 2018).
The IBC divides creditors into two groups: financial creditors

and operational creditors. Financial creditors are banks and other
lenders, while operational creditors are generally vendors and ser-
vice providers. 85 As explained more fully in Subpart C, this divide
is stark in terms of pre-plan control, plan voting, and ultimately the
most important aspect of a case-how much a creditor is paid.
The concept does not exist in the USBC. Creditors in the United
States are generally divided into secured and unsecured creditors,
with further stratification of unsecured claims among administra-
tive, priority, and general unsecured classes. The IBC largely sepa-
rates creditors into banks and everyone else. 86
The bankruptcy system in the United States has no agency
charged with its regulation, like the Environmental Protection
Agency or the Food and Drug Administration. Regulation is left to
the courts through rulemaking and case law, and to a lesser extent
to the Department of Justice through the U.S. Trustee program.
In contrast, the IBC created the Insolvency and Bankruptcy Board
of India (IBBI), a regulatory agency charged with oversight of the
system and its professionals. 8 7 The IBBI has been active in its role
promulgating regulations to improve efficiencies in the system and
to answer questions that have not been resolved by the tribunals or
courts. It also regulates the information utilities, (another concept
and agency without a parallel in the United States), which are
responsible for collecting meta and individual case data and pro-
viding that data to stakeholders. 88 Perhaps most importantly, it
regulates India's insolvency professionals.
In the United States, any licensed lawyer may represent a debtor
in a bankruptcy case, subject only to court approval. In practice,
that approval is generally contingent only on the lawyer having no
conflict. 89 Accountants often serve as trustees, again with no speci-
fied qualifications other than competence. Not so in India. The
IBC has created a new "occupational class" of bankruptcy profes-
sionals who must meet and maintain strict regulatory standards for
85. Insolvency and Bankruptcy Code §§ 5(7), (8), (20), (21).

86. The IBC protects the in rem rights of secured creditors as well. See id. § 30(2) (b).
In addition, in the Second Amendment to the IBC, the definition of financial creditor was
amended to include homebuyers who had tendered a deposit. Insolvency and Bankruptcy
Code (Second Amendment) Act, No. 26 of 2018, INDIA CODE (2018), § 3 (amending IBC
§ 5(8)).
88. Id. §§ 209-16.
89. 11 U.S.C. § 327(a) (2018).
competence and ethics. 9 0 These are the Insolvency Professional,

Insolvency Professional Agency, and Insolvency Professional Entity.
Insolvency Professionals are basically responsible for all aspects of
an insolvency case, including representing the debtor with third
parties, interacting with the creditors, and soliciting and present-
ing resolution plans. 9 1 Professionals wishing to be designated as
Insolvency Professionals must pass an examination, pay fees, and
register with the IBBI.92 Insolvency Professionals must also be a
member of an Insolvency Professional Agency, which are also
highly regulated by the IBBI.95 In 2018, the IBBI also began to
recognize and regulate Insolvency Professional Entities. 9 4
In the United States, Article I bankruptcy courts serve as the trial
court for bankruptcy cases. Conversely, the IBC expressly provides
that no civil court has jurisdiction over corporate IBC cases. 9 5
Under the IBC, courts have been sidelined in favor of tribunals
whose role is largely hands-off and relegated to enforcing dead-
lines and ensuring certain boxes are checked before a creditor-
approved plan is implemented. 96 The IBC vests exclusive trial juris-
diction over corporate cases in the National Company Law Tribu-
nal. 97 The NCLT was created by The Companies Act of 2013,
which provided for the governance and responsibilities of compa-
nies in India, as well as one of the last efforts to manage corporate
insolvency before the IBC was passed. 98 The NCLT bench is com-
prised of experienced judges and lawyers appointed by members of
the judiciary and Central Government, 99 but is not itself a court.
The same is true for the first-level appellate tribunal, the National
Company Law Appellate Tribunal. 100 It is only at the next level of
90. Feibelman, Legal Shock or False Start, supra note 36, at 439-40.
92. Id. §§ 206-08; see also, e.g., Insolvency and Bankruptcy Board of India (Insolvency
Professionals) Regulations, 2016, Gazette of India, pt. III sec. 4 (as amended up to Apr. 24,
2020).
94. Insolvency and Bankruptcy Board of India (Insolvency Professionals) (Amend-
ment) Regulations, 2018, Gazette of India, pt. III sec. 4 (Mar. 27, 2018).
95. Insolvency and Bankruptcy Code §§ 63, 64(2).
96. See discussion on different roles played by U.S. bankruptcy courts and the NCLT
infra Part II.C.
97. Insolvency and Bankruptcy Code § 60 (defining "Adjudicating Authority" as the
NCLT).
98. See The Companies Act, 2013, No. 18, ch. XXVII, Acts of Parliament, 2013 (India).
99. See id. §§ 408, 409, 412.
100. See Insolvency and Bankruptcy Code § 61; The Companies Act §§ 410-12.
appeal, to the Supreme Court of India-the third body to hear the

101
dispute-that a court is involved for the first time.
Finally, the United States has added chapter 15 to the USBC,
adopted from the United National Commission on International
02
Trade Law's Model Law on Cross-Border Insolvency.1 Chapter 15
governs cross-border insolvencies to prevent inconsistent judg-
ments in different countries. The law allows for cooperation and
coordination in four main areas: access, recognition, relief, and
cooperation. Representatives of insolvency foreign proceedings
are granted access to the courts of an enacting state. Orders issued
by foreign courts are recognized by the enacting state to prevent
competing orders and inconsistent results. Various forms of relief
are available, e.g., an automatic stay, to prevent disruption of for-
eign proceedings. Cooperation is made possible by allowing courts
to communicate directly with their foreign counterparts during
concurrent proceedings or when dealing with assets in another
country.1 0 3
The automatic reciprocity that comes from enactment of the
model law is lost in India. Although forty-eight countries have
enacted a version of the model law since its adoption by the U.N.
General Assembly in 1997,104 India did not do so when the IBC was
enacted in 2016. The IBC instead provides that India may enter
into bilateral agreements with other countries on cross-border
insolvency issues. 105 While Parliament continues to debate
106
whether to amend the IBC to add the model law, no bilateral
agreements have been reached under sections 234-235.107 This
could be a limiting factor in a global economy.

102. 11 U.S.C. § 1501 (1978).
103. See UNCITRAL Model Law on Cross-Border Insolvency (1997), UNITED NATIONS COM-
MISSION INT'L TRADE L., https://uncitral.un.org/en/texts/insolvency/modellaw/cross-bor-
der_[https://perma.cc/HZ7N-VBDP] (last visited Jan. 29, 2020).
104. See id. (follow "Status" hyperlink).
106. India's Insolvency Law Committee has recommended the adoption of a frame-
work based on the United Nations Commission on International Trade Law (UNCITRAL)
model law. MINISTRY OF CORP. AFFAIRS, REPORT OF THE INSOLVENCY LAw COMMITTEE ON
CROSS BORDER INSOLVENCY 5 (Oct. 2018), www.ibbi.gov.in/uploads/resources/
Report_onCross%20Border_Insolvency.pdf [https://perma.cc/2WGX-Q6D5].
107. In fact, no agreements could be reached. While sections 234-35 are included in
the IBC, those sections have not yet been notified by the Central Government (the final
step in enactment) and are therefore not yet law. See State Bank of India v. Jet Airways
(India) Ltd., CP 2205/MB/2019, 1 24(e), NCLT, Mumbai (India).
C. The Differences
The differences in the codes highlight the differences in priori-

ties. No argument is made here that either system is normatively
"correct," but rather this Section attempts to show the mechanisms
used by each country to further its own goals. The USBC tilts
toward debtor rehabilitation, while the IBC prioritizes creditor
recoveries and speed. 108 USBC procedures maximize the chances
for each individual company and its management to survive, while
IBC procedures nudge the result toward the most efficient use of
capital on a macroeconomic level. While the goal of both systems
is to encourage entrepreneurship through clear rules in the event
of distress, the U.S. model does it by providing a safety net for own-
ership. India instead provides for quick creditor recoveries and,
consequently, quick redeployment of resources.
Indian lawmakers attempted to deliver rapid creditor recoveries
by streamlining the process and giving creditors control. 109 Credi-
tors make or direct all major decisions, and the IBC requires that
the entire process be completed in a year or less. Courts have been
sidelined in favor of tribunals and the tribunal's role is largely rele-
gated to enforcing deadlines and ensuring certain boxes are
checked before a creditor-approved plan is implemented.
The differences begin at the outset of the case. In the United
States, when a corporate debtor files a voluntary petition, that
debtor is immediately "in bankruptcy," and is entitled to all the
rights and privileges of that status, including the automatic stay.110
There are no minimum or maximum debt limits for corporate
debtors, or even an insolvency requirement."' There is no exami-
nation of the debtor's situation by a court nor a declaration that
the debtor is eligible. In the rare involuntary cases, creditors gen-
erally must form coalitions and satisfy several conditions (including
an insolvency test) to force a debtor into bankruptcy.1"2 If they fail,
those creditors may be forced to pay damages to the debtor,
including punitive damages in some cases.11 3 The prospect of
damages is one reason the vast majority of corporate bankruptcy
108. See M/S Innoventive Indus. v. ICICI Bank, (2017) Civil App. Nos. 8337-8338, 11
14-15 (India).
109. Chitra Sharma v. Union of India, (2017) W.P. (Civil) No. 744, 1 26 (India) ("The
IBC reflects a fundamental shift from a 'debtor in possession' to a 'creditor in possession.'
The resolution process is market driven.").
110. 11 U.S.C. §§ 301, 362(a) (2018).
111. See 11 U.S.C. § 109 (1978).
112. Id. § 303.
113. See id.
14
cases are voluntary cases filed by the debtor.' Another is the pan-
oply of rights granted to debtors in the United States, which incen-
tivizes debtors to seek bankruptcy protection.
The opposite is true in India. Thus far, only around 10% of all
resolution cases have been filed by corporate debtors, the rest
being involuntary cases initiated by financial creditors (approxi-
mately 40% of all cases) or operational creditors (50%).115 Debt-
ors are disinclined to seek bankruptcy protection in India, because
it comes with a loss of control and the real prospect of a quick
liquidation. Creditors are incentivized to push debtors into bank-
ruptcy because creditors are then in control of the bankruptcy case
and, by extension, the debtor. The initiation process is a longer
one, though, and it requires creditors to jump through a few hur-
dles before the debtor is effectively captured by the system. The
filer must show that the debtor is in default of a debt of at least one
lakh rupees ($1443).116 Financial creditors have the luxury of
using a default to any financial creditor (not necessarily the filer)
to initiate the process. The financial creditor submits evidence of
the default and nominates a hand-picked interim resolution pro-
fessional. The tribunal then has fourteen days to analyze the
default and investigate the proposed professional. If the financial
creditor has met its burden, the application is admitted, the mora-
torium goes into effect, and the resolution deadlines begin run-
ning.11 7 The process is longer and more stringent for operational
creditors, who can rely only on their own debt to initiate the pro-
cess. Operational creditors must also first make a formal demand
on the debtor for repayment of that debt, give the debtor ten days
18
to respond, and then file the bankruptcy application.1 Unlike in
114. In 2018, involuntary petitions filed by creditors accounted for 0.4% (thirty of
7,014) of chapter 11 cases. JudicialFacts and Figures 2018: Table 7.2-U.S. Bankruptcy Courts-
Voluntary and Involuntary Bankruptcy Cases Filed, by Chapter of the Bankruptcy Code, U.S. CTS.
2
https://www.uscourts.gov/statistics-reports/judicial-facts-and-figures- 018 [https://
perma.cc/7QDE-TM1S] (last updated Sept. 30, 2018). Of the 477,248 chapter 7 cases
filed in 2018 (including consumer cases), only 256 (0.05%) were involuntary. Id.
115. Of the 1,858 corporate resolution cases filed through March 2019, 920 were initi-
ated by operational creditors, 738 by financial creditors, and 200 by corporate debtors.
Individual Insolvency: The Next Big Thing, INSOLVENCY & BANKR. NEwS (Insolvency & Bankr.
Bd. of India, New Delhi, India), Jan.-Mar. 2019, at 13 tbl.3.
116. Insolvency and Bankruptcy Code, No. 31 of 2016, INDIA CODE (2016), §§ 4(1), 6.
117. Id. § 7.
118. Id. §§ 8-9. As with other areas of the IBC (e.g., committee representation, vot-
ing), operational creditors have fewer rights than financial creditors in case initiation. See
id. §§ 7, 9. The Supreme Court of India has made clear that if a debtor presents a dispute
that "truly exists in fact and is not spurious, hypothetical or illusory, the adjudicating
authority has to reject the application" without reaching the merits of the defense.
the United States, there does not seem to be any penalty under the
IBC for creditors who fail to have an application admitted.
After the bankruptcy begins, the role of management under the
two systems is markedly different. In the United States, many chap-
ter 11 provisions spell out the rights and duties of a trustee, but in
practice those duties are performed by the debtor-in-possession
(existing equity/management).119 U.S. management typically
remains in place to run the company, negotiate with vendors and
creditors, and ultimately, formulate and seek approval of a plan.
Quite often, the shareholders are the managers. If not, their inter-
ests still align, incentivizing the managers to stretch out the bank-
ruptcy process as long as possible while they search for a solution
to turn the company around to preserve their jobs and equity's
investment. 120 Unless the company is sold, that same management
almost always remains in control when the reorganized debtor
emerges from bankruptcy. Continued control allows management
to use the threat of bankruptcy during prepetition negotiations, to
formulate the plan most advantageous to the debtor while in bank-
ruptcy, and to keep their jobs (and often their investment) after
bankruptcy.
The process in India could not be more different. Equity imme-
diately loses control of the company and the bankruptcy process.
Low-level decision-making is shifted to a neutral insolvency profes-
sional who acts as a short-term crisis manager and information
clearinghouse for creditors and suitors. That person must be an
Insolvency Professional regulated by the IBBI, known in the bank-
ruptcy case as the interim resolution professional. 1 21 The resolu-
tion professional is akin to a chapter 11 trustee in the United
States, except that in India it happens 100% of the time and it
happens immediately. 122 The powers of the board of directors are
Mobilox Innovations Private Ltd. v. Kirusa Software Private Ltd., (2017) Civil App. No.
9405, 1 40 (India).
119. See, e.g., 11 U.S.C. §§ 1104-08 (1978).
120. The debate over whether continued control by management is the best model is
not new. While some advocate for the immediate removal of management and replace-
ment with a neutral model (India's new model), some go further and argue for immediate
liquidation in all cases. Douglas G. Baird, Revisiting Auctions in Chapter 11, 36 J.L. & ECON.
633, 647-48 (1993).
121. Insolvency and Bankruptcy Code §§ 13(c), 16.
122. In the United States, chapter 11 trustees are appointed for cause, usually in
instances of fraud or gross mismanagement 11 U.S.C. § 1104. Appointments are rare. A.
Mechele Dickerson, Privatizing Ethics in Corporate Reorganizations, 93 MINN. L. REv. 875,
898-902 (2009). There are at least two reasons for this. First, the USBC disfavors the
appointment of a trustee by setting high standards for removal of management. See id.
The thinking is that management is generally in the best position to turn the company
suspended, officers and employees report to the interim resolution

professional, and the financial institutions that maintain the
debtor's accounts must act on the interim resolution professional's
instructions. 123 The interim resolution professional runs the com-
pany while at the same time collecting information related to the
debtor's assets, liabilities, payments, and business operations. She
receives and reviews claims against the debtor and takes control of
all property of the bankruptcy estate. The interim resolution pro-
fessional then forms a committee of creditors and presents the
information to that committee. 124 This is all done within roughly a
month, until the committee is formed, and a permanent resolution
professional is appointed. 125
The interim resolution professional then relinquishes control to
the resolution professional, also an IBBI-regulated Insolvency Pro-
fessional, who performs the same management and preservation
duties as the interim. The resolution professional also negotiates
and solicits resolution plans from resolution applicants and
presents those plans to the committee of creditors. 126 Basically, she
finds suitors for the company and the creditors decide which plan
they like best. Appointing a temporary neutral to run the company
removes any notion of self-dealing so the neutral can focus on
working toward the best result for creditors. 12 7 This highlights the
next major difference: control of the case.
around, and U.S. policymakers have made the normative decision that voluntary bank-
ruptcy filings by management should be encouraged and that one of the best ways to do
that is to leave management in place with the ability to control most aspects of the com-
pany and the bankruptcy case. Elizabeth Warren, Bankruptcy Policymaking in an Imperfect
World, 92 MICH L. REV. 336, 371-72 (1993); see also Michelle H. Harner, The Search for an
UnbiasedFiduciaryin CorporateReorganizations, 86 NOTRE DAME L. REV. 469, 520 (2011) (not-
ing the perception that trustees strip the debtor of a meaningful say in the case and almost
ensure a liquidation of some sort). The second reason is that most creditors do not want a
trustee appointed, so they do not seek it. Melissa B. Jacoby, Corporate Bankruptcy Hybridity,
166 U. PA. L. REV. 1715, 1735-36 (2018). Some DIP lenders go as far as to make the
appointment of a trustee an event of default in post-petition loan documents. Dickerson,
supra note 122, at 901-02 (collecting cases).
124. Id. §§ 18-21.
125. Id. § 16(5).
126. Id. §§ 23, 25, 28-30.
127. See Baird, supranote 120, at 894-95. The United States adopted the trustee model
in the Chandler Act of 1938, championed by then-SEC Commissioner, and later Supreme
Court Justice, William O. Douglas. Bratton & Skeel, supra note 42, at 1578. As with India's
"new" model, the Chandler Act required the removal of a corporate debtor's management
and replacement with a court-appointed trustee. Id. When the USBC was enacted in 1978,
the trustee requirement was removed, and managers were given enhanced rights in run-
ning the company and proposing a plan. Id. at 1579-80. As expected, corporate managers
were then more willing to file bankruptcy as a strategic option. Id.
In the United States, the debtor, acting through its manage-

ment, is in control. In India, the debtor, acting through the resolu-
tion professional, is ostensibly in control. But even that control is
limited to day-to-day management and the gathering of informa-
tion and solicitation of buyers. Creditors hold the real power
under the IBC. The interim resolution professional is selected by
the creditor who initiates the IBC process. 128 The committee of
creditors, comprised solely of the financial creditors, 129 later selects
a new resolution professional (or retains the interim) and has the
power to replace that person at any time. 130 In addition to serving
at the pleasure of the committee, the resolution professional must
also obtain committee approval for any major decisions, such as
borrowing money, modifying the corporate structure, or changing
the management team. 131 Although the resolution professional
solicits resolution applications and reviews them for compliance
with the IBC and committee requirements, her role stops there.
Neither equity nor the resolution professional have any vote on the
path forward for the debtor. Only the committee decides which
132
plan, if any, to approve.
In the United States, the creditors' committee is one of many
players. In India, the committee is the decision-maker. A commit-
tee in the United States is generally comprised of unsecured credi-
tors, and acts as a check on the secured creditors and the debtor.
It can file suit to challenge a secured creditor's lien or ask that a
trustee be appointed to manage the debtor in limited circum-
stances. 133 In India, the committee does not challenge the secured
creditors because they control the committee. There are no
motions to appoint a trustee because a trustee already runs the
debtor in the form of the resolution professional, who is controlled
by the committee. If the committee disapproves of what the resolu-
134
tion professional is doing, it simply removes him.
In the United States, the committee generally negotiates with the
debtor over plan provisions. Its members then vote as members of
one or more classes. The USBC, which provides for the grouping
of similar claims into classes, allows each impaired class (and, by
128. Insolvency and Bankruptcy Code §§ 7(3)(b), 9(4), 10(3)(b), 16.

129. Id. § 21.
130. Id. §§ 22, 27.
131. Id. § 28.
132. Id. § 30.
133. 11 U.S.C. § 1103 (2018).
extension, every impaired claimant) to vote on the plan.13 5 Accept-

ance of the plan by a class requires an affirmative vote by at least
two-thirds in amount and more than half in number of the voting
claimants in that class. 136 For a consensual plan to be confirmed,
13 7
every impaired class must vote in favor of the plan. Confirma-
tion of a non-consensual plan requires approval of at least one class
138
and the satisfaction of several additional requirements.
In India, voting is less nuanced and inclusive, but much simpler.
There is a single voting class-the committee-made up only of
the financial creditors. For plan approval, at least 66% of the cred-
39
itor committee voting shares must vote in favor of the plan.1
Financial creditors control the process and the outcome, with a
limited role for the other creditors and the tribunal.
U.S. bankruptcy judges are active throughout the life of a chap-
ter 11 case. Bankruptcy courts are called upon to rule on many
contested matters prior to plan confirmation, for instance, multi-
ple creditor motions for adequate protection or stay relief, and
40
debtor motions to borrow money or sell property.1 Creditors
may attempt to have the case cut short, and the court must deter-
mine if cause exists for dismissal or conversion to a liquidation.141
Courts hear creditor objections to debtor's requests to approve dis-
closure statements and confirm plans, often suggesting or mandat-
42
ing modifications to make plans statutorily compliant.1 Courts
have fairly wide discretion in granting debtors extensions of time
to negotiate and confirm plans, often granting multiple extensions
over creditors' objections. These extensions can postpone the con-
firmation deadline up to twenty months after the filing of the
135. 11 U.S.C. §§ 1122, 1126.

136. Id. § 1126.
137. Id. § 1129(a). Unimpaired classes are deemed to have voted in favor of the plan.
Id. §§ 1124, 1126(f).
138. Id. § 1129(b).
139. Insolvency and Bankruptcy Code § 30(4) (amended 2018). "Voting share" means
the share of the voting rights of a single financial creditor, determined by the proportion
of that creditor's financial debt to the debtor's total financial debt. Id. § 5(28). The larger
financial debts tend to be secured debts, so secured lenders control the committee. There
is no mechanism in the IBC for approval of a non-consensual plan.
140. 11 U.S.C. §§ 361-64; see also Bratton & Skeel, supra note 42, at 1593 ("Although
deference to consensual arrangements runs deep, so too does the perception that the par-
ties cannot simply be left to their own devices .. .. In current bankruptcy, judicial over-
sight of the bankruptcy process is the most pervasive government function. The
bankruptcy judge oversees nearly every facet of the process . . .. ").
141. 11 U.S.C. § 1112.
142. Id. §§ 1125, 1129.
case. 143 Even then, the import of the twenty months is that it is the
outside limit of the "exclusivity period," the period of time when
only debtors may file a plan.1 4 4 In the absence of the court order-
ing otherwise, there is no automatic dismissal or conversion to a
liquidation after the exclusivity period expires. And even after a
plan is confirmed, cases often go on for years.
In contrast, the IBC strictly curtails the involvement and discre-
tion of NCLT judges, particularly when it comes to these exten-
sions. This is one of the most dramatic differences between the
two systems. The resolution professional has 180 days to get a plan
approved, or the case is immediately converted to a liquidation. 14 5
The six-month deadline may be extended once, but for no more
than ninety days, and only then at the direction of the creditor
committee. 146 The deadlines do not end with plan approval. The
IBC was recently amended to require that the entire case be com-
pleted within 330 days. 147
India has largely privatized the bankruptcy process. Creditors
make most of the decisions and the parties then pop into the tribu-
nal from time to time to obtain orders validating those decisions. 14
NCLT judges do not rule on motions to convert, because the com-
mittee has the power to simply decide that the debtor should be
liquidated at any time before plan approval. There is no second-
guessing by the tribunal-the NCLT is required to pass a liquida-
143. Id. § 1121(d).

144. Once the exclusivity period expires, any other stakeholder is free to propose a
plan (usually for the debtor's liquidation). Id.
145. Insolvency and Bankruptcy Code, No. 31 of 2016, INDIA CODE (2016), §§ 12, 33.
The resolution deadlines are strictly enforced, but again, the bankruptcy case does not
begin, and the clock does not begin to run, until the application is admitted. The courts
have been more flexible in finding that pre-admission deadlines are directory, rather than
mandatory. See M/S Surendra Trading Co. v. M/SJuggilal KmalapatJute Mills Co., (2017)
Civil App. No. 8400, 1 22 (India) (explaining that "this period ... given by the statute to
the adjudicating authority to take a decision to admit or reject the application is directory

147. Id. § 12(3) (amended by The Insolvency and Bankruptcy Code (Amendment)
Act, 2019, No. 26, § 4, Acts of Parliament, 2019 (India)). Regulation 40A provides a model
timeline for resolution cases. Insolvency and Bankruptcy Board of India (Insolvency Reso-
lution Process for Corporate Persons) Regulations, 2016, Gazette of India, pt. III sec. 4,
§ 40A (as amended up to July 25, 2019).
148. See M/S Innoventive Indus. v. ICICI Bank, (2017) Civil App. Nos. 8337-8338, 1 16
(India) ("In the past, laws in India have brought arms of the government (legislature,
executive or judiciary) into this question. This has been strictly avoided by the Committee.
The appropriate disposition of a defaulting firm is a business decision, and only the credi-
tors should make it.") (quoting the BANKRUPTCY LAw REFORMS COMMITTEE REPORT, supra
note 5, at 12).
14 9
tion order once it is informed of the committee's decision. If
the debtor needs to borrow money, the resolution professional
15 0
seeks approval from the committee, not the NCLT. Plan
approval is likewise controlled by the committee. So long as opera-
tional creditors and dissenting financial creditors receive as much
as they would receive in a liquidation, the committee is free to
accept almost any plan and the tribunal's role is limited to entering
the confirmation order. 151
The typical plan is also different. While plans in the United
States may provide for a sale of assets, management typically tries to
avoid an outright sale of the company because it usually results in
the loss of equity's investment and management's jobs. Chapter 11
debtors generally seek to reorganize the company and its debt
structure and emerge more or less intact. If the company is sold,
U.S. practitioners think of it as an asset sale rather than a
reorganization.
Indian practitioners think of a sale as a successful reorganization
because every approved plan is a sale of the company in some
form. 15 2 The resolution professional's post is always temporary,
and his main job is to find a permanent buyer to take over the
company. By the time of plan solicitation (well before plan confir-
mation), management has already been removed. Unlike Ameri-
can companies, Indian companies that survive bankruptcy always
emerge with a new face of the company.
The U.S. and Indian bankruptcy models are certainly different,
but it is difficult to say which is more efficient. An efficiency analy-
sis begs the question, efficient at doing what? If the goal is to move
fast and favor creditors, the IBC is better suited to achieve that end.
If the goal is to restructure businesses (and their debt) and save
management, the USBC is more likely to lead to that end. If the
goal is to avoid error, each system is biased toward a particular
error. Type I error occurs when financially distressed but economi-
cally efficient companies are liquidated instead of reorganized. It
149. Insolvency and Bankruptcy Code § 33(2). In the third amendment to the IBC, an
"Explanation"was added after subsection (2) to make explicitly clear that the committee
has the power to convert the case at any time before plan approval, even before plans are
solicited.
150. Id. §§ 20(2) (c), 23(2), 28.
151. Id. §§ 30, 31.
152. Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Cor-
porate Persons) Regulations, 2016, Gazette of India, pt. III sec. 4, § 36-38 (as amended up
to July 25, 2019) (providing detailed information on developing and executing a resolu-
tion plan which include selling the assets of the corporate debtor).
leads to higher transaction costs because the firm's efficient model

means it is more likely to be reopened. There is a further cost
from the loss of the ousted managers' institutional and industry
knowledge. The IBC's tight timelines, mandatory management
removal, and sale in all cases lean toward type I error. When firms
that are both financially distressed and economically inefficient are
saved, type II error occurs. The cost of type II error is that assets,
(both hard and liquid), remain locked in inefficient uses.1 53 The
U.S. model, with its longer timeline and management-friendly pro-
visions, leans toward type II error. India's former patchwork of
insolvency and collection laws tilted the same way. This is exactly
what the IBC was designed to change.
III. THE RESULTS (THUS FAR)
So, is the IBC working? The answer is a matter of perspective.

This Part begins with an overview of the World Bank's Doing Busi-
ness reports, the methodology used to generate the reports, and
the most recent results for India, focusing on the category most
relevant to this Article-Resolving Insolvency.1 54 This Part analyzes
and critiques the Resolving Insolvency methodology and its effects
on the results. It then presents actual bankruptcy case data from
the IBBI, which paint a different (in one regard better, in another,
probably worse) picture from Doing Business. This Part then com-
pares the IBBI numbers to the World Bank numbers where possi-
ble and identifies one glaring shortcoming with the IBBI data.
This Part concludes with statistics from the Reserve Bank of India
(RBI) that indicate the IBC is having a positive impact on capital
markets, both in terms of increasing capital flows and decreasing
bad loans.
At the outset, it is important to note that there is a debate about
the importance of law in development. Some argue that the legal
environment is important to capital markets, while others contend
there is virtually no connection between legal reforms and develop-
ment.155 More to the point of this Part, there are critics of the
153. Michelle J. White, The Costs of Corporate Bankruptcy: A U.S.-European Comparison, in

CORPORArE BANKRUprCY: ECONOMIC AND LEGAL PERSPECTIVES 467, 489 (Jagdeep S.
Bhandari & Lawrence A. Weiss eds., 1996).
154. Like the IBC at this stage, the DoingBusiness Resolving Insolvency indicator is con-
cerned with insolvency law and outcomes only for domestic corporate entities. See 2014
INDIA REPORT, supra note 6, at 114-17; 2014 WORLD REPORT, supra note 6, at 101-05. It
does not examine the insolvency of consumers or financial institutions.
155. See, e.g., Kevin E. Davis & Michael J. Trebilcock, The Relationship Between Law and
Development: Optimists Versus Skeptics, 56 AM. J. CoMP. L. 895, 945-46 (2008) (discussing that
World Bank's efforts to quantify law and its effects on develop-

ment.1 56 This Part focuses on Doing Business not because I think
law matters to development-I think it does-but because the gov-
ernment of India is using it as a benchmark. Doing Business matters
here because it matters to Indian officials.' 5 7 The concern here is
whether the Resolving Insolvency methodology has yielded accu-
rate results for India.
The government's stated goal was to break into the top fifty of
the World Bank rankings. While not yet in the top fifty, India's rise
has been meteoric. Since the adoption of the IBC, India has risen
in the Doing Business index more than any other country. But
World Bank metrics indicate that some of the principal ills the IBC
was to address remain unchanged, at least thus far, in that imple-
mentation of the IBC has not yet succeeded in putting more
money back in creditors' pockets or in getting it there more
quickly. The World Bank reports that recovery rates still hover
around twenty-five cents on the dollar and it still takes over four
years to collect.
Although the comparison with the World Bank data is not apples
to apples, Indian governmental data, based on actual cases, show
different results. Actual bankruptcy case lengths are much shorter
than the World Bank figures. Actual recovery rates have improved
in those categories that have been reported but are likely much
lower in unreported cases. Lenders appear to be encouraged by
the new law, as aggregate commercial lending has increased every
a model legal reform implemented in developed countries may not meet the needs of the
developing countries); Rafael La Porta, Florencio Lopez-De-Silanes, Andrei Shleifer
&
Robert W. Vishny, Legal Detrimentsof ExternalFinance, 52J. FIN. 1131, 1149 (1997) (explain-
ing that a good legal environment is critical for expanding the size of capital markets).
156. Holger Spamann, Large-Sample, Quantitative Research Designsfor ComparativeLaw?,
57 AM. J. COMP. L. 797, 807 (2009) (internal citations omitted) [hereinafter Spamann,
Large-Sample, Quantitative Research]. Professor Spamann summarized the debate nicely:
Attempts to measure law in the 'legal origins' literature and the World Bank's
Doing Business project are considered a major innovation by some and a major
foolishness by others. The critics might agree that 'when you cannot express it in
numbers, your knowledge is of a meagre and unsatisfactory kind,' but point out
that it is better to have such 'meagre and unsatisfactory' knowledge than to have
no knowledge at all disguised in meaningless numbers.
Id.
157. See Kevin E. Davis, Data and Decentralization:Measuringthe Performanceof Legal Insti-
tutions in Multilevel Systems of Governance, 102 MINN. L. REv. 1619, 1624 (2018) ("Perform-
ance measures are of practical significance mainly because of how they influence the
performance of legal officials."); Kevin E. Davis & Michael B. Kruse, Taking the Measure of
Law: The Case of the Doing Business Project, 32 LAw & Soc. INQUIRY 1095, 1115 (2007) (find-
ing that lawmakers in developing countries face considerable pressure to improve perform-
ance as measured by Doing Business).
year since the IBC became law. Banks' non-performing asset per-
centages have peaked and are now dropping.
A. The Perceived Data: World Bank Rankings
The World Bank releases its Doing Business reports annually to

help governments and researchers analyze the business environ-
ments in 190 countries and to compare those countries to each
other. It does this by presenting quantitative indicators across a
spectrum of property rights and business regulations in each coun-
try, resulting in both an ease of doing business score and an ease of
doing business ranking for each country. Each year's global report
details the methodology for gathering the data and presents the
results in summary fashion. Individual country reports present
more detail on the data for that country.
DoingBusiness 2019 measured ten categories: business incorpora-
tion processes, obtaining construction permits, getting electricity,
registering property, access to credit, protecting minority investors,
paying taxes, enforcing contracts, engaging in international trade,
and resolving insolvency. 158 For each country, a score ranging
from 0 to 100 was determined for each of the ten categories, with 0
being the worst regulatory performance and 100 the best. Each
category's score was then sorted to determine that country's rank
for that category.
The scores for all ten categories were then added and averaged,
159
with each category weighted equally. The resulting number is
1
the overall ease of doing business score for that country. 60 The
ease of doing business ranking is determined by a simple sorting of
the scores, from 1 to 190.161
India's 2019 overall score was 67.23, which translated to a rank-
ing of seventy-seventh. 16 2 When Prime Minister Modi set the top
fifty goal, India's overall rank was 134th.163 This fifty-seven-spot
jump over the last six years is the highest of any of the 190 coun-
tries measured. Because the ten categories have equal weight in
determining the overall score (and by extension, the rank), it is
158. 2019 GLOBAL REPORT, supra note 43, at 22, 23, 126-28. Labor market regulation is
also measured but reported separately and is not a part of the rankings. See id.
159. Id. at 126-30.
160. See id. at 4.
161. Id. at 132.
162. Id. at 5. Of the 190 countries in the 2019 Global Report, only 22 saw their scores
increase by more than 2 points over the prior year. Id. India's score increased by 6.63
points, resulting in a 23-spot rise in the rankings. Id.
163. 2014 INDIA REPORT, supra note 6, at 5.
easy to see the categories that have driven the rise. In Obtaining
Construction Permits, India moved from 182nd place to 52nd, a
rise of 130 spots. It moved up eighty-seven places in Getting Elec-
tricity. Trading Across Borders saw a fifty-two-spot rise, forty-two
for Starting a Business. Except for Registering Property, which fell
seventy-four places during this six-year period, India improved its
ranking in every category.
World Bank Ranking
2014164 2015165 2016166 2017167 2018168 2019169

Starting a Business 179 158 155 15 156 137
Obtaining 182 184 183 185 181 52
Construction Permits
Registering Property 92 121 138 138 154 166
Getting Credit 28 36 42 44 29 22
Protecting Minority 34 7 13 4 7
Investors
Paying Taxes 158 156 157 172 119 121
Trading Across 132 126 133 143 146 80
Borders ___ ______ ______
Enforcing Contracts 186 186 178 172 164 163

tesolving Insolveney 121 137 136 136 103 108
Getting Electricity 111 137 70 26 29 24
OVERALL 134 142 130 130 100 77
What is striking is not how much those categories improved, but

how little Resolving Insolvency improved. Resolving Insolvency has
undergone the second-least change since 2014, rising only thirteen
places from 121st to 108th.17o This is curious for several reasons.
164. Id. at 10-13 (ranking 189 countries).

165. WORLD BANK, DOING BUSINESS 2015: GOING BEYOND EFFICIENCY-ECONOMY PRO-
FILE 2015: INDIA 19, 34 (12th ed. 2014) [hereinafter 2015 INDIA REPORT] (ranking 189
countries).
166. WORLD BANK, DOING BUSINESS 2016: MEASURING REGULATORY QUALITY AND EFFI-
CIENCY 208 (13th ed. 2016) [hereinafter 2016 INDIA REPORT] (ranking 189 countries).
167. WORLD BANK, DOING BUSINESS 2017: EQUAL OPPORTUNITY FOR ALL 213 (14th ed.
2017) [hereinafter 2017 INDIA REPORT] (ranking 190 countries).
168. WORLD BANK, DOING BUSINESS 2018: REFORMING TO CREATE JOBS 167 (2018) [here-
inafter 2018 INDIA REPORT] (ranking 190 countries).
169. 2019 INDIA REPORT, supra note 38, at 4 (ranking 190 countries).
170. Getting Credit, a related category, saw the least change with an improvement of 6
places. There was not much room for improvement in Getting Credit, as India was already
ranked 28th in that category in 2014. 2014 INDIA REPORT, supra note 6, at 11. The IBC is
First, developing and passing a new bankruptcy code was one of

the main initiatives the government pursued in its quest to rise in
the overall rankings. 171 The IBC was passed in 2016, yet India's rise
in this category has been modest. Second, it is widely recognized
that passage of the IBC and a tax reform package have been the
72
most significant, legal reforms in India over the last several years.1
India's overall rank has risen dramatically, but not Resolving Insol-
vency-one of its most significant reforms. 173 Third, the World
Bank has recognized that "[t]he area of resolving insolvency is the
most challenging of all worldwide . . . yet this should not discour-
age economies from taking steps in this direction." 174 Worldwide,
Resolving Insolvency does have the lowest average score relative to
the other nine categories. 175 But India has taken dramatic steps in
this direction, with a complete overhaul of its insolvency laws.
Given how low the worldwide averages are and India's relatively
low rank in this category before the new law, a more dramatic rise
would have been expected after 2016.
Why has Resolving Insolvency remained relatively static? The
answer may be in the Doing Business methodology itself. India's
public focus has been on its ranking, which is a measure relative to
all the other countries. That ranking is, again, determined by its
score. If a country's score improves in a category, it means the
regulatory and legal environment in that category improved,
regardless of the impact that improvement had on the ranking. A
country's score could improve, but its ranking could still fall if
other countries improved more (or vice versa).176 While the focus
noted in the 2019 Global Report as a positive reform for India in the Getting Credit cate-
gory, rather than the Resolving Insolvency category. 2019 GLOBAL REPORT, supra note 43,
at 140-41.
171. BANxRurcv LAw REFORMS COMMrTEE REPORT, supra note 5, at 7.
172. Feibelman, Legal Shock or False Start, supra note 36, at 435; see also, e.g., Press
Release, Insolvency & Bankr. Bd. of India, The Board Recognizes Insolvency Professional
Entities (Mar. 6, 2017) ("The [IBC] is considered the biggest economic reform next only
to [Goods and Services Tax]"). Paying Taxes has risen from 172nd in the 2017 Report to
121st in 2019.
173. While the IBC has had little impact in the Doing Business rankings, others have
taken notice. For instance, India received the London-based Global Restructuring Review
Award for Most Improved Jurisdiction in 2018. Press Release, Insolvency & Bankr. Bd. of
India, India Wins the GRR Award for the Most Improved Jurisdiction (June 28, 2018). The
award recognizes the jurisdiction that improved its insolvency regime the most over the
past year. See id.
174. 2019 GLOBAL REPORT, supra note 43, at 7.
175. Id.
176. For example, India's Resolving Insolvency Score improved from 40.75 to 40.84 in
the 2019 Report, but its rank fell from 103 to 108. 2019 INDIA REPORT, supra note 38, at 4;
2018 INDIA REPORT, supra note 168, at 167.
has been on the rankings, the starting point is the score and the
methodology that produced that score.
To determine the Resolving Insolvency score, the World Bank
measures two things: (1) the strength of the legal framework for
insolvency (the law itself), and (2) the time, cost, outcome, and
recovery rate for a commercial insolvency (the effect of the law).177
The data for these measurements come from questionnaire
responses from local insolvency practitioners. Uniform hypotheti-
cal scenarios are distributed to insolvency professionals in each
country. Respondents "answer tick-the-box questions for a long list
of possible procedural steps, and provide estimates of the out-of-
178
pocket cost and duration of various stages of the procedure." A
World Bank team then verifies the results through multiple interac-
tions with the respondents 179 and through an analysis of the appli-
180
cable laws and regulations as well as public information. The
median response determines a score for the recovery rate indica-
tors and a separate score is assigned to the strength of insolvency
framework index. The Resolving Insolvency score is the simple
average of the two components. 18 1
1. The Strength of Insolvency Framework Index

Half of the Resolving Insolvency score comes from the strength
of insolvency framework index. The index was added to Doing Bus-
iness in the 2015 reports. 18 2 Until then, Resolving Insolvency was
measured solely by the recovery rate score, determined through
the questionnaires using the hypotheticals. "The new strength of
insolvency framework index measures the quality of insolvency
laws, while the previous methodology (recovery rate) captures the
insolvency practice."1 83 The purpose of the index was to evaluate
the law itself to see where improvements could be made. The ques-
tions are not based on hypothetical scenarios but instead ask
mainly binary questions about what the code itself provides. The
18 4
same questions are asked for every economy.

178. Holger Spamann, Legal Origin, Civil Procedure, and the Quality of Contract Enforce-
ment, 166 J. INSTITUTIONAL & THEORETICAL ECON. 149, 152 (2010).
179. Id.
181. Id.
182. wORLD BANK, DOING BUSINESS 2015: GOING BEYOND EFFICIENCY 96-101 (12th ed.
2015) [hereinafter 2015 GLOBAL REPORT].
183. See id. at 97.
184. La Porta et al. created a similar creditors' rights index in their 1998 paper. La
Porta et al., supra note 31, at 1135-37.
The index moves through four areas of a country's insolvency

process: commencement of proceedings, management of debtor's
assets, reorganization proceedings, and creditor participation. 18 5 It
asks sixteen questions, with each answer resulting in a score of 0,
0.5, or 1. The sum of those scores is the country's strength of insol-
vency framework index, ranging from zero to sixteen, "with higher
values indicating insolvency legislation that is better designed for
rehabilitating viable firms and liquidating nonviable ones." 18 6
The description of the framework, and the questions themselves,
make clear that the framework is designed to examine bankruptcy
codes like the IBC. Unfortunately, the data are still grounded in
the questionnaires:
The information used to compile the strength of insolvency
framework index was provided by private and public sector
insolvency practitioners in each economy with reference to the
applicable laws and regulations. The Doing Business team ana-
lyzed both primary and secondary sources in evaluating to what
extent insolvency laws in each economy accord with internation-
ally accepted good practices. Based on this analysis, the team
assigned a score for each of the 4 component indices. 18 7
In other words, the Doing Business team examines the law, but
the respondents tell them what law to examine. 18 8 But there is no
need to group-source this data set because the index is designed to
measure an insolvency code. The IBC is the comprehensive insol-
vency code in India, and it expressly supersedes all inconsistent
prior laws. 189 Given that the respondents' recovery rate responses
are not assuming resolution through the IBC, 190 it is not clear that
the World Bank is examining the IBC when answering the index
questions, although the 2019 Global Report provides: "[t] he Doing

186. Id. at 121.
188. See 2019 GLOBAL REPORT, supra note 43, at 27 ("In principle, the role of the con-
tributors is largely advisory-helping the Doing Business team to locate and understand the
laws and regulations.").
189. Insolvency and Bankruptcy Code, No. 31 of 2016, INDA CODE (2016), § 238; Pr.
Comm'r of Income Tax v. Monnet Ispat & Energy Ltd., (2018) Civil App. No. 6483, 2
(India) ("Given section 238 of the [IBC], it is obvious the Code will override anything
inconsistent contained in any other enactment.").
190. 2019 INDIA REPORT, supra note 38, at 96 ("Given that the Insolvency and Bank-
ruptcy Code has only been in force since 1 December 2016, a foreclosure is still the most
likely procedure in practice."). Although outside the data set of this Article, the 2020 India
Report does now assume an IBC proceeding rather than a foreclosure. 2020 INDIA REPORT,
supra note 38, at 110. This did not lead to more accurate index scoring. In fact, India's
index score went down by a point to 7.5, rather than up to the score of 12 argued for
below. Id. at 111.
Business team collects the texts of the relevant laws and regulations
and checks the questionnaire responses for accuracy. The team
will examine the civil procedure code, for example, ... and read
the insolvency code to identify if the debtor can initiate liquidation
1
or reorganization proceedings." 19 The World Bank recognized
that "[e]conomies that have reformed their insolvency laws in the
past several years score substantially higher on the strength of
insolvency framework index than economies with outdated insol-
vency provisions." 19 2 Yet India's strength of insolvency framework
index improved only 2.5 points between 2015 (when the laws were
still a hodgepodge with often conflicting provisions) and 2019
(when India had a comprehensive bankruptcy code the index is
designed to measure).193
In the 2019 India Report, India's strength of insolvency frame-
work index was 8.5.194 If the strength of insolvency framework
index is an examination of the IBC, which this Article contends it
ought to be, then the IBC ought to be read differently than how
the Doing Business team reads it. The answers to most of the ques-
tions in the framework are clear, others are judgment calls. A close
examination of the IBC and each of the four components of the
framework shows that at least six of the sixteen scores should have
19 5
been different, and the index score should have been twelve.
i. Commencement of Proceedings Index
The commencement of proceedings index asks three questions,

with higher values indicating greater access to insolvency
proceedings:
" Whether debtors can initiate both liquidation and reorganiza-
tion proceedings. A score of 1 is assigned if debtors can initi-
ate both types of proceedings; 0.5 if they can initiate only
one of these types (either liquidation or reorganization); 0 if
they cannot initiate insolvency proceedings.

193. 2019 INDIA REPORT at 97, 101. The IBC became effective in 2016. See Insolvency
and Bankruptcy Code, No. 31 of 2016, INDIA CODE (2016). Data collection for the 2019
India Report was completed in May 2018. 2019 INDIA REPORT, supra note 38, at 107.
194. Id. at 97, 101. The index is reported for both Delhi and Mumbai. See id. The
scores are identical, so the Mumbai scores only are cited. Identical scores were expected
for the index, as the index is meant to examine the provisions of the IBC, rather than how
a case would proceed in different locales within the country. The relevant portions of the
IBC apply "to the whole of India," so the answers should be identical in Delhi, Mumbai,
and everywhere else. Insolvency and Bankruptcy Code § 1(2).
195. A table summarizing the differences is on file with the author.
" Whether creditors can initiate both liquidation and reorgani-

zation proceedings. A score of 1 is assigned if creditors can
initiate both types of proceedings; 0.5 if they can initiate only
one of these types (either liquidation or reorganization); 0 if
they cannot initiate insolvency proceedings.
" What standard is used for commencement of insolvency pro-

ceedings. A score of 1 is assigned if a liquidity test (the
debtor is generally unable to pay its debts as they mature) is
used; 0.5 if the balance sheet test (the liabilities of the debtor
exceed its assets) is used; 1 if both the liquidity test and the
balance sheet test is available but only one is required to ini-
tiate insolvency proceedings; 0.5 if both tests are required; 0
if a different test is used. 196
India's score was 2.0. Following the assessment below, it should
have been 2.5.
The first question is whether debtors can initiate both liquida-
tion and reorganization proceedings. India received a 0.5 for this
question, with a notation that "debtors may file for reorganization
only." 19 7 This is technically incorrect, but 0.5 is a proper score.
While debtors have the right to initiate reorganization (resolution)
proceedings, they also have the right to initiate voluntary liquida-
tion cases. 198 But the voluntary liquidations come with two strin-
gent eligibility requirements: the debtor must not be in default
with any creditor and must be able to pay its debts in full. 199 Those
requirements mean the voluntary liquidation debtors are not insol-
vent and those cases are somewhat remote from the traditional
notion of a bankruptcy liquidation. There is no provision allowing
a debtor to seek liquidation if it cannot satisfy the solvency require-
ments. As a result, 0.5 is the most appropriate score.
The index next asks whether creditors can initiate both liquida-
tion and reorganization proceedings. India received a 0.5 here as
well. 2 00 This could be viewed as technically correct, but a more
nuanced analysis shows that the full point should have been
awarded. IBC sections 6, 7, and 8 are clear that creditors can initi-
ate reorganization proceedings. 20 1 Section 33(2) is equally clear
that the committee of creditors can choose to liquidate the debtor
at any time, regardless of whether the resolution period has
196. 2019 GLOBAL REPORT, supra note 43, at 120 (emphasis added).
198. Insolvency and Bankruptcy Code §§ 6, 10, 59.
199. Id. § 59.
201. Insolvency and Bankruptcy Code §§ 6, 7, 8.
20201 Racing to Resolution 429
expired. 202 This gives financial creditors the ability to liquidate

debtors from the outset of the case. Therefore, a score of 1 should
have been awarded here.
The third question focuses on the insolvency test for commence-
ment of the case. The IBC uses a liquidity test. The debtor or any
creditor may initiate a case when a corporate debtor commits a
"default," which is generally defined as the non-payment of any
20 4
debt as it becomes due. 2 03 The score of 1 was correct.
ii. Management of Debtor's Assets Index

The management of debtor's assets has six components, with
higher values indicating more advantageous treatment of the
debtor's assets from the perspective of the debtor's stakeholders:
" Whether the debtor (or an insolvency representative on its
behalf) can continue performing contracts essential to the
debtor's survival. A score of 1 is assigned if yes; 0 if continua-
tion of contracts is not possible or if the law contains no pro-
visions on the subject.
" Whether the debtor (or an insolvency representative on its

behalf) can reject overly burdensome contracts. A score of 1
is assigned if yes; 0 if rejection is not possible or if the law
contains no provisions on this subject.
" Whether contracts entered into before commencement of

insolvency proceedings that give preference to one or several
creditors can be avoided after proceedings are initiated. A
score of 1 is assigned if yes; 0 if avoidance of such transac-
tions is not possible or if the law contains no provisions on
this subject.
" Whether undervalued transactions entered into before com-

mencement of insolvency proceedings can be avoided after
proceedings are initiated. A score of 1 is assigned if yes; 0 if
avoidance of transactions is not possible or if the law con-
tains no provisions on this subject.
" Whether the insolvency framework includes specific provi-

sions that allow the debtor (or an insolvency representative
on its behalf), after commencement of insolvency proceed-
ings, to obtain financing necessary to function during the
proceedings. A score of 1 is assigned if yes; 0 if obtaining
post-commencement finance is not possible or if the law con-
tains no provisions on this subject.
202. Id. § 33(2).

203. Id. §§ 6, 3(12).
" Whether post-commencement finance receives priority over

ordinary unsecured creditors during distribution of assets. A
score of 1 is assigned if yes; 0.5 if post-commencement
finance is granted super priority over all creditors, secured
and unsecured; 0 if no priority is granted to post-commence-
ment finance or if the law contains no provisions on this
subject. 20 5
India's management of assets score was 4.5. While the overall
score for this category was accurate, the below assessment shows
that one inquiry receiving a 0 should have received a 1, and vice
versa.
The management of debtor's assets index first asks whether the
debtor (or an insolvency representative on its behalf) can continue
performing contracts essential to the debtor's survival. The report
answered in the negative, resulting in a score of 0.206 Section 14(2)
makes clear that "the supply of essential goods or services to the
corporate debtor as may be specified may not be terminated or
suspended or interrupted during the moratorium period."2 0 7 Sec-
tion 20 further provides that the resolution professional shall make
every effort to manage the debtor as a "going concern" and has the
specific power "to enter into contracts on behalf of the corporate
debtor or to amend or modify the contracts or transactions that
were entered into before" the bankruptcy case was commenced. 2 08
Even a liquidator is required to "carry on the business of the corpo-
rate debtor for its beneficial liquidation as he considers necessary"
and the liquidation estate includes contract rights. 209 A score of 1
should have been awarded.
The index next asks whether the debtor or insolvency represen-
tative can reject overly burdensome contracts. An answer of yes
was reported and 1 point awarded. 2 10 There is no provision in the
IBC allowing the rejection of contracts, and 0 should have been the
score.
Questions Three and Four under this section ask whether the
framework provides for the avoidance of preferential transfers and
undervalued transactions. The IBC provides for both, and 1 point
was correctly awarded for each question. 2 11
205. 2019 GLOBAL REPORT, supra note 43, at 120-21.

207. Insolvency and Bankruptcy Code § 14(2). The moratorium period lasts until a
plan is approved or a liquidation order is entered. Id. § 14(4).
208. Id. §§ 20(1), (2)(b), 23(1)-(2).
209. Id. §§ 35(1)(e), 36(3)(d).
The next two inquiries focus on obtaining new loans during the
bankruptcy case. The first is whether the framework includes spe-
cific provisions that allow the debtor or insolvency representative
to obtain post-filing financing. The answer is yes (with creditor
approval), and 1 point was correctly awarded. 212 The final ques-
tion examines the priority status granted to post-filing loans. The
IBC grants priority to post-filing loans over all pre-filing loans, both
secured and unsecured, so 0.5 was correctly awarded. 213
iii. Reorganization Proceedings Index
The reorganization proceedings index asks three questions, with

higher values indicating greater compliance with internationally
accepted practices:
" Whether the reorganization plan is voted on only by the
creditors whose rights are modified or affected by the plan.
A score of 1 is assigned if yes; 0.5 if all creditors vote on the
plan, regardless of its impact on their interests; 0 if creditors
do not vote on the plan or if reorganization is not available.
" Whether creditors entitled to vote on the plan are divided

into classes, each class votes separately and the creditors
within each class are treated equally. A score of 1 is assigned
if the voting procedure has these three features; 0 if the vot-
ing procedure does not have these three features or if reor-
ganization is not available.
" Whether the insolvency framework requires that the dissent-

ing creditors receive as much under the reorganization plan
as they would have received in liquidation. A score of 1 is
assigned if yes; 0 if no such provisions exist or if reorganiza-
21 4
tion is not available.
This section applies to reorganization proceedings, as opposed
to liquidations, and examines voting and distribution rights. This
area received a score of 1, which is correct. 21 5
The first question asks whether only those creditors whose claims
are affected vote on the plan. A score of 1 is assigned if only
affected creditors vote, 0.5 if all creditors vote, or 0 if creditors do
not vote at all. A score of 0 was assigned in the report, although
some creditors do vote on the plan. Under the IBC, all financial
212. Id. §§ 20(2)(c), 23(2).

213. Id. §§ 30(2)(a), 53(1)(a), 61(3)(iv).
2 16
creditors vote on the plan and no operational creditors vote. It
is the status of the debt, not impairment of the claims, that deter-
mines who gets to vote. Admittedly, the IBC does not fit neatly into
this question and an argument could be made for any of the three
scores. Given the way the question is framed and its scoring
scheme, none of the three answers are correct but none are more
incorrect than the other two. Unable to show that the score should
be different than the reported score, the score of 0 was accepted.
The next inquiry poses three questions: whether creditors enti-
tled to vote on the plan are divided into classes, whether each class
votes separately, and whether creditors within each class are
treated equally. All three must be answered positively for a yes
answer and a score of 1; otherwise the score is 0. There are no
voting classes under the IBC. The committee of creditors votes as a
whole without regard to secured status, lien priorities, or impair-
ment.21 7 The score of 0 was correctly assigned here.
The final question in this category is whether the insolvency
framework requires that dissenting creditors receive as much
under the reorganization plan as they would have received in liqui-
dation. The question was answered in the affirmative, and a score
of 1 was awarded. Operational creditors, who have no voting
rights, must receive no less than liquidation value under any plan
approved by the financial creditor committee. 2 18 When the data
were collected for the 2019 India Report, the CIRP Regulations
also provided that dissenting financial creditors were to receive liq-
uidation value before consenting financial creditors received any
payment. 2 19 Under this grading, 1 is the correct score.
216. Insolvency and Bankruptcy Code § 30(4) (amended by § 23 (iii) (a) of The Insol-
vency and Bankruptcy Code (Second Amendment) Act, 2018, No. 26, Acts of Parliament,
2018 (India)) (stating the "committee of creditors" may approve a plan by a vote of not less
than 66% of the voting share of the financial creditors); see also id. § 21(2) (stating the
committee of creditors shall comprise all financial creditors of the debtor).
217. Id. §§ 21(2), 30(4).
218. Id. § 30(2) (b) (providing a best interest test for operational creditors).
219. Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Cor-
porate Persons) Regulations, 2016, Gazette of India, pt. III sec. 4, § 38 (as amended up to
Jan. 4, 2018). That regulation was removed in 2018, Insolvency and Bankruptcy Board of
India (Insolvency Resolution Process for Corporate Persons) (Fourth Amendment) Regu-
lations, 2018, Gazette of India, pt. III sec. 4, 1 6 (Oct. 5, 2018), but the IBC was amended
in 2019 to provide that dissenting financial creditors must receive what they would have
received in a liquidation. See Insolvency and Bankruptcy Code (Amendment) Act, 2019,
No. 26, § 6, Acts of Parliament, 2019 (India) (amending Insolvency and Bankruptcy Code
§ 30(2)(b)), http://www.egazette.nic.in/WriteReadData/2019/210234.pdf [https://
perma.cc/2ZAT-5C29].
iv. Creditor Participation Index
The creditor participation index has four components, with

higher values indicating more participation by creditors:
" Whether creditors appoint the insolvency representative or
approve, ratify or reject the appointment of the insolvency
representative. A score of 1 if assigned if yes; 0 if no.
" Whether creditors are required to approve the sale of sub-

stantial assets of the debtor in the course of insolvency pro-
ceedings. A score of 1 is assigned if yes; 0 if no.
" Whether an individual creditor has the right to access finan-

cial information about the debtor during insolvency pro-
ceedings. A score of 1 is assigned if yes; 0 if no.
" Whether an individual creditor can object to a decision of

the court or of the insolvency representative to approve or
reject claims brought against the debtor by the creditor itself
and by other creditors. A score of 1 is assigned if yes; 0 if
no. 2 2 0
This is where the largest disparity between IBC practices and
index score is found. The IBC clearly prefers creditors' rights and
creditor control. Despite this preference, the creditor participa-
tion index received a score of 1. Following the assessment below, it
should have been a score of 4.
The first question is whether creditors appoint the insolvency
representative or approve, ratify, or reject the appointment of the
insolvency representative. The report answered in the negative
and awarded a score of 0. But the IBC expressly provides that the
creditors' committee shall either confirm or replace the interim
22 1
resolution professional at its first meeting. The committee
retains that right to replace the insolvency professional at any time
during the insolvency resolution process. 222 A score of 1 should
have been awarded.
The next question asks whether creditor approval is required for
a sale of a substantial portion of the debtor's assets. The report
again answered in the negative and awarded 0 points. But all reso-
lutions under the IBC require approval of 66% of the creditors'

221. Insolvency and Bankruptcy Code § 22(2).
222. Id. § 27.
committee, so the answer should have been yes and 1 point

awarded. 223
The third question is whether an individual creditor has the
right to access financial information about the debtor during insol-
vency proceedings. The score of 1 was correct, as the information
rights are broader than just making the information available to
creditors. 224 The insolvency professional must also collect informa-
tion about the debtor's assets and operations and submit it to the
central information utility, as well as prepare an information mem-
orandum for resolution applicants (buyers).225
RESOLVING INSOLVENCY: STRENGTH OF FRAMEWORK INDEX
Doing Business Score 45
,
IBC Score 4.5 1
0 2 4 6 8 10 12 14 16
Sub-Indicator Score
Commencement of proceedings index (0-3) Management of debtor's assets index (0-6)

" Reorganization proceedings index (0-3) U Creditor participation index (0-4)
The final question is whether an individual creditor has the right

to object to a decision of the court or the insolvency representative
to approve or reject claims. The report answered no and awarded
a score of 0. The correct answer is yes, as decisions of both can be
appealed. The resolution professional assigns voting rights based
on the debt owed to each creditor. 226 Liquidators also analyze or
reject claims. Aggrieved creditors may appeal to the NCLT. 2 27
NCLT decisions may be appealed to the National Company Law
Appellate Tribunal (NCLAT), and ultimately, to the Supreme
Court.228 This inquiry should have received a score of 1.
223. Id. § 30(4) (amended 2018). Should resolution fail and a liquidator be
appointed, the liquidator does have the power to sell assets. Id. § 35(1) (f). Creditor con-
sultation is allowed but creditor instructions are not binding on the liquidator. Id. § 35(2).
224. See id. § 21(9), (10); Insolvency and Bankruptcy Board of India (Insolvency Reso-
lution Process for Corporate Persons) Regulations, 2016, Gazette of India, pt. III sec. 4,
4 36 (as amended up to July 25, 2019).
225. Insolvency and Bankruptcy Code §§ 18(e), 29.
226. Id. § 24(6), (7).
227. Id. §§ 38-42.
228. Id. §§ 60-62.
The strength of insolvency framework index was 8.5 in 2019,

while it should have been at least 12. The overall Resolving Insol-
vency score is the simple average of the index and the recovery rate
score. 229 A comparison to Afghanistan is helpful. Afghanistan's
recovery rate matches India's rate at 26.5 cents on the dollar, but
Afghanistan has a framework index of 12.230 The result for Afghan-
231
istan is a Resolving Insolvency score of 51.78 and a rank of 74th.
Even if no changes are made to India's recovery rate score, an
increase in India's index to 12 would result in India also having a
Resolving Insolvency score of 51.78 and a matching rank of 74th
(instead of 108th). A Resolving Insolvency score of 51.78, as
opposed to the 2019 score of 40.84, would improve India's overall
ease of doing business score to 68.33. That would, in turn, improve
its overall ease of doing business ranking to 70th.232
Isolating the strength of framework index in this way shows the
improvement in DoingBusiness that should have been realized from
passage of the IBC alone, without adjusting for any impact in actual
results. Some of this improvement is already reflected in India's
Resolving Insolvency rise from 121st to 108th, as the recovery rate
score has been almost completely static since passage of the law. If
the index is adjusted to 12, with the attendant rise in score, India's
Resolving Insolvency ranking would have improved fifty-one spots
simply by passing the law-without any regard for its efficacy.
2. The Recovery Rate Score
Turning now from the de jure to the de facto, the recovery rate
score is the means by which Doing Business seeks to measure the
actual effect of the law on recoveries by creditors and the time it
takes to achieve those recoveries. Judging from Doing Business,
there has been virtually no improvement since passage of the IBC.
At the end of the day, what matters to creditors is how much they
recover and how long it takes to get it. India's poor performance
on these two benchmarks was referenced repeatedly by the World
23 3
Bank and India's Bankruptcy Reforms Committee. While the
overall rankings suggest substantial improvement, the underlying

230. Id. at 152.
231. Id.
232. The overall score would be equal to the Kyrgyz Republic's score, and by extension,
its rank. Id. at 182.
233. See, e.g., BANKRUcrCY LAw REFORMS COMMITTEE REPORT, supra note 5, at 10, 34.
World Bank data indicate that creditors are not yet finding them-
selves in a better position even after the enactment of the IBC.
Indeed, Doing Business reports that recovery rates for the three
years prior to the IBC are virtually identical to recovery rates for
the three years since enactment. Over that same period, resolution
times are reported as static. The 2014 India Report showed that
creditors were collecting only 25.6 cents on the dollar. 234 The
reported rate steadily moved upward over the next five years-by
less than a penny. Average collections were effectively unchanged
for 2015 and 2016.235 In 2016, the IBC was passed. In 2017, the
reported average moved only to 26.0 cents. 236 The 2018 and 2019
reported averages inched up to 26.4, and then to 26.5 cents,
respectively. 23 7 If the reported figures are accurate, recovery rates
have increased less than 1% since passage of the IBC.
WORLD BANK RANKING AND REPORTED RECOVERY RATE

Year
2014 2015 2016 2017 2018 2019
0 100
Passage of the IBC 90 -.
20 (May 2016) 80
80 ,.
40
70.
b60 60 0
WB Ranking 5
80 (left axis) v
100 40
30
120
-
20
~- fWB
'
Reported
140 Recovery Rate 10 e
(right axis) 0
160
Another goal of the IBC was to shorten the time it takes to col-
lect. The World Bank data show no improvement here, either. In
fact, reported resolution times are completely flat. In 2014, the

235. 2015 INDIA REPORT, supra note 165, at 109; 2016 INDIA REPORT, supra note 166, at
208.
94-95.
average time to resolution was 4.3 years. 238 In 2019, the average
time to resolution was still reported to be 4.3 years. 239 And it was
4.3 years in every year between the two. 24 0 If these figures are accu-
rate, the IBC has done nothing to shorten resolution times, at least
so far.
WORLD BANK RANKING AND REPORTED RESOLUTION TIME

Year
2014 2015 2016 2017 2018 2019
0 0
Passage of IBC (May 2016)
20 0.5
1
40
1.5 e
~ 60
60 WB Ranking 2
-
(left axis)
80 2.5
100 33
120
4
140
WB Reported Resolution 4.5
Time (right axis)
160 5
The question is, again, why? The answer, again, may be in the
DoingBusiness methodology itself. The recovery rate (and its score)
is derived from a calculation of the time, cost, duration, and out-
come of insolvency proceedings in each economy. 241 It has been
recognized that the quality of a country's bankruptcy law can be
measured this way. 242 Doing Business does it by using standard
assumptions that can be applied across countries, so the results can
then be compared. But the value of the comparison is dependent
on the quality of the data.

239. 2019 INDIA REPORT, supra note 38, at 94-95.
213; 2016 INDIA REPORT, supra note 166, at 208; 2015 INDIA REPORT, supra note 165, at 109.
242. Spamann, Large-Sample, Quantitative Research, supra note 156, at 808.
First, there may be a sampling issue in the India reports. Most of

the questionnaire respondents are "legal professionals such as law-
yers, judges or notaries . . . who regularly undertake the transac-
tions involved." 243 This is a complicating factor in India. The
hypothetical allows for three options: judicial reorganization, judi-
2
cial liquidation, or judicial foreclosure. 44 The responses embod-
ied in the 2019 India Report led to this projection for both Delhi
and Mumbai:
To enforce its security interest, BizBank would file a petition to
the Debt Recovery Tribunal, governed by The Recovery of Debts
Due to Banks and Financial Institutions Act, 1993. The debtors
and other creditors will object before the High Court. Given
that the Insolvency and Bankruptcy Code has only been in force
since 1 December 2016, a foreclosure is still the most likely pro-
cedure in practice. 245
Given the case assumptions, it is curious that the respondents
assume a judicial foreclosure would be the likely outcome. While
the IBC was only about eighteen months old when the data were
collected, it was well-publicized and hundreds of corporate bank-
ruptcy cases had already been filed, including many high-profile
cases. The hypothetical debtor meets the debt eligibility thresh-
old. 24 6 The secured bank wants to recover as much as possible, as
24 7
quickly and cheaply as possible. IBC cases are time-bound at no
more than 270 days to resolution or liquidation begins, so a bank-
ruptcy case would be much quicker and cheaper than the 4.3 years
the respondents report for a judicial foreclosure. The unsecured
creditors, including operational creditors, "will do everything per-
mitted under the applicable laws to avoid a piecemeal sale of the
assets." 248 If those creditors are truly doing everything permitted to
avoid a foreclosure sale, they will not "object before the High

244. Id. at 119.
245. 2019 INDIA REPORT, supra note 38, at 96, 100.
246. IBC corporate eligibility requires a default of at least 1 lakh (around $1400).
Insolvency and Bankruptcy Code, No. 31 of 2016, INDIA CODE (2016), § 4(1). The hypo-
thetical debtor has no cash to pay the bank the balance of its loan when it comes due the
next day. 2019 GLOBAL REPORT, supra note 43, at 119. The loan balance is exactly equal to
the market value of the business, which is the greater of $200,000 or 100 times income per
capita. Id. at 118-19. India's gross per capita income in the 2019 Global Report was
$1820. Id. at 177. $1820 * 100 = $182,000 < $200,000.
248. Id.
Court" but instead stop the foreclosure action with their own IBC
application. 24 9
The reason most of the respondents assumed a foreclosure may
not be because of what was asked but because of who was asked.
The IBC effectively privatized bankruptcy by creating an "Adjudi-
cating Authority," which for corporate debtors is the National
Company Law Tribunal-not a court. 250 No civil court has jurisdic-
tion when the NCLT has jurisdiction. 25 1 But none of the contribut-
ing judges in the 2019 India Report are NCLT judges-all are civil
court judges. 252 If a judge is asked how a scenario is going to play
out, she is going to say how it would play out in her court, not in
the NCLT.
Under the IBC, the professional who manages all aspects of cor-
porate bankruptcy case carries the highly-regulated designation of
Insolvency Professional, who must be a member of an Insolvency
Professional Agency. 253 In the 2019 India Report, it appears that
only twelve of the forty-six contributors were Insolvency Profession-
als. 254 Even if those twelve individuals projected a bankruptcy case
and estimated the data points under the IBC, they were "outvoted"
249. So far, operational creditors have initiated approximately half of all IBC resulting
in resolution. See Individual Insolvency: The Next Big Thing supra note 115, at 13 tbl.3.
250. Insolvency and Bankruptcy Code §§ 5(1), 60.
251. Id. §§ 63, 231.
252. See generally 2019 GLOBAL REPORT, supra note 43, at 217-302. The 2019 Global
Report provides:
Doing Business would not be possible without the expertise and generous input of
a network of more than 13,800 local partners, including legal experts .... The
names of the local partners wishing to be acknowledged individually are listed
below. The global and regional contributors listed are firms that have completed
multiple questionnaires in their various offices around the world.
Id.
253. Insolvency and Bankruptcy Code §§ 3(19), 207.
254. See generally Contributors in India, WORLD BANK, https://www.doingbusiness.org/
en/contributors/doing-business/india (last visited Aug. 17, 2020) (The Doing Businessweb-
site reports that there were forty-six contributors to Resolving Insolvency for India in the
2019 report, but the list-of contributors is not broken down by category. Instead, an alpha-
betical list of all 371 India contributors, covering all categories, is provided). For this Arti-
cle, all 371 India contributors, as well as the twenty global and eighteen regional
contributors, were cross-checked against the registered insolvency professional databases
on the IBBI's website. Registered IPs, INSOLVENCY & BANKR. BOARD INDIA, https://
www.ibbi.gov.in/ips-register/view-ip/1 [https://perma.cc/63EN-3TBJ] (last visited Aug.
17, 2020). The search revealed that eleven of the contributors were Insolvency Profession-
als. There were five more possible matches and another seven with names in common that
do not appear to be matches (different addresses, firms, backgrounds, etc.). A chart listing
each possible match is on file with the author.
by the other respondents. 25 5 None of the firms listed as India con-

tributors are an Insolvency Professional Agency or an Insolvency
6
Professional Entity. 25
The respondent judges are reporting the steps and costs
involved in judicial foreclosure proceedings because those are the
types of insolvency-type cases they adjudicate. The respondent law-
yers are reporting the steps and costs involved in foreclosure pro-
ceedings because those are the financial distress cases they
prosecute and defend. The respondents are not reporting on the
steps, costs, duration, and outcomes under the IBC because it
appears the majority of the respondents who receive the question-
naires are not the ones handling IBC cases. The respondents are
introducing subjectivity into the projection because of their own
perceptions, 25 7 and they are also operating in a different sphere
than the IBC players. This is problematic because half of India's
Resolving Insolvency score was derived from the strength of frame-
work index (the IBC) and half was clearly derived from the pro-
jected outcomes under foreclosure law. The result is that the
methodology has inadvertently married two entirely different sets
of laws to determine one score. One would not examine the U.S.
Bankruptcy Code and then check to see how long it takes to per-
form a state law foreclosure. It is like measuring pain relief by ana-
lyzing the chemical composition of an aspirin and then projecting
the effects of an antacid.
There are other issues with the standardized assumptions in the
questionnaires. The hypothetical debtor is a hotel business in the
country's largest city. 258 For economies with a population of more
than 100 million people, since 2015 the data have been collected
and reported for both the largest and second largest city. For
India, with a total population well over a billion people, both Delhi
and Mumbai were reported. The largest cities assumption high-
lights a few problems. First, practices and outcomes in Delhi or
Mumbai may be materially different than practices and outcomes
255. 2019 GLOBAL REPORT, supra note 43, at 27 ("When respondents disagree, the time
indicators reported by Doing Business represent the median values of several responses
given under the assumptions of the standardized case.").
256. For the vast majority of the 371 individual contributors, the Doing Business website
also lists each contributor's firm. Contributors in India, supra note 254. Each firm was also
cross-checked against the IBBI database.
257. See Bertrand du Marais, Methodological Limits Doing Business Reports', in DES INDI-
CATEURS POUR MESURER LE DROIT Z 17, §§ 4.1, 5.1.1 (2006), available in English at https://
papers.ssm.com/sol3/papers.cfm?abstract_id=1408605 [https://perma.cc/LKC8-69AF].
in smaller cities or rural India, in the same way practices and out-
comes in New York City may be materially different than in Kansas
City or rural Mississippi. 25 9 Professor Davis summarized the prob-
lem well:
For example, a businessperson considering an investment in
Mexico might be perfectly happy to rely on the World Bank's
national indicators to estimate the ease of doing business in the
country, on the theory that the variations within a country like
Mexico are likely to be small in relation to the variations across
countries. If the plan is to build a warehouse though, the
national figure could be misleading. When it comes to
obtaining a construction permit, in 2016, Colima, a small state
on the Pacific coast, performed on par with the best cities in the
world while Mexico as a whole, whose rankings were based on
data from Mexico City and Monterrey, ranked eighty-seventh in
the world. 260
Second, the 2019 data are suspect in that all figures for Delhi are
26 1
precisely the same as all figures for Mumbai. The recovery rate
is the same (26.5 cents). Time to resolution is the same (4.3 years).
Cost of the proceedings is the same (9.0%). The Doing Business
methodology indicates that where two cities are included, the score
comes from a population-weighted average. 26 2 So even though the
2019 India Report presents two distinct scores, it may actually be
presenting the same score twice, once under the heading Mumbai
and once under Delhi. But whether it is one score or two, the con-
sistency of the data is still troubling. In the last six India reports,
the time to resolution has always been reported as 4.3 years and the
cost of proceedings has always been reported as 9.0%. The recov-
ery rate has moved less than a penny during those six years. This
remarkable consistency includes figures from before 2015, when
263
only Delhi was measured, and after, when Mumbai was included.
It also reports for years before the IBC was passed and after.
Despite these important variables, the respondents are giving the
same responses year after year.
259. See e.g., Davis, supra note 157, at 1620.

260. Id. at 1642. This limitation is recognized in Doing Business. See, e.g., 2019 GLOBAL
REPORT, supra note 43, at 25 tbl.2.3 (explaining that the focus on the largest business cities
"[r]educes representativeness of data for an economy if there are significant differences
across locations").
261. 2019 INDIA REPORT, supra note 38, at 94-101.
262. 2019 GLOBAL REPORT, supra note 43, at 25, 130.
263. Although some figures changed dramatically in the 2020 India Report that are
outside this data set, this phenomenon did not. Mumbai's and Delhi's reported recovery
rates (now 71.6 centst), case lengths (now 1.6 years), and costs of proceedings (9.0%) are
the same for both cities. 2020 INDIA REPORT, supra note 38, at 110, 115.
In India, the Resolving Insolvency score is not really a compre-

hensive score. Instead it is the average of two distinct scores: an
examination of bankruptcy law and an estimate of the results of a
foreclosure action. In the India reports, the ex ante theoretical
model is divorced from the ex post observation, 264 but worse. The
Doing Business method does not produce an observation, it pro-
duces a projection. Fortunately, the IBBI provides a great deal of
the data that allow observers to judge how well the IBC itself is
working. The IBBI statistics have two advantages over Doing Busi-
ness in measuring India's insolvency regime: IBC cases are ana-
lyzed, and the data show the actual results for those actual cases.
While there have been other criticisms of the Doing Business
methodology, this is where the real flaw is revealed. As du Marais
elegantly observed, "[o]ne also observes significant differences
between the physical magnitudes calculated in the Doing Business
database and the reality recorded in the official statistics." 265 Or as
he more directly put it, "none of these figures correspond to
reality."266
B. The Actual Data: Governmental Figures
The good news for India is that the actual data show progress has
been made. Statistics from the Indian government indicate that
IBC has had more of an impact in some areas than the Doing Busi-
ness reports show. What follows is a summary of several sets of data
from both the IBBI and the Reserve Bank of India (RBI). The
strength of this data is that it is derived from results in actual cases,
not hypotheticals. These figures are useful in their own right, and,
in some cases, as comparators to the World Bank data.
IBBI data indicate that IBC case lengths are much shorter than
the numbers yielded by the DoingBusiness hypothetical. The recov-
ery rate data is much less useful, as the IBBI does not report recov-
ery rates for liquidations-almost three-fourths of completed cases
thus far. RBI numbers demonstrate that capital is flowing more
freely to India's commercial sector than before passage of the IBC.
The RBI's efforts to force bad loans, known as non-performing
assets (NPAs), through the IBC process have also been fruitful, and
NPAs are now on the decline. Considered collectively, these data
show that the government's goals are beginning to be realized.
264. du Marais, supra note 257, at § 4.1.

265. Id. § 3.1.2.
266. Id.
1. Case Length
The IBBI has reported case length for every case that has been
fully processed through the IBC: resolutions, involuntary liquida-
tions, and voluntary liquidations. The mean case length for every
category is less than a year. The IBBI numbers are reported in
summary fashion but can be verified because case lengths are
reported on a case-by-case basis. 267 The data set is large enough to
provide a meaningful population mean, and there are no sampling
concerns because the data set is small enough to allow for a cen-
sus. 268 The governmental figures are averages of the results in
actual cases, covering the spectrum of debtors, creditors, and
industries that have emerged from the IBC process. In contrast,
the World Bank figures are averages based on responses to a very
specific hypothetical.
There are some limitations on the utility of the comparison
between the World Bank estimates and IBBI actual case data
because they use different starting and ending points. The World
Bank asks respondents to measure the time "from the company's
default until the payment of some or all of the money owed to the
bank." 269 The IBBI measures resolution times from the date an
IBC application is filed to the date a resolution plan is approved or
an order of liquidation is entered. 27 0 The IBBI times are inher-
ently shorter because an IBC application will almost never be filed
on the date of default and creditors will rarely receive payment on
the day the plan approval or liquidation order is filed. The mea-
surement differences can be controlled for to a limited, but maybe
not completely quantifiable, extent. The World Bank hypothetical
is framed in a way to make clear that the bank is a motivated credi-
27
tor seeking to recover its loan as quickly as possible. 1 The hypo-
thetical bank would therefore be expected to act shortly after the
default. In addition, the RBI's mandate to force banks to expedite
their reporting and resolution of NPAs would also expedite the
267. See, e.g., Individual Insolvency: The Next Big Thing, supra note 115, at 13-17. A few
errors were discovered in the reports and identified and corrected for those errors in the
figures reported herein. Those adjustments are listed in endnotes to tables on file with the
author.
268. Id. Included are all ninety-eight cases where a resolution plan has been approved,
all 378 cases where an involuntary liquidation order has been entered, and all forty-one
voluntary liquidations that have been completed.
270. See, e.g., du Marais, supra note 257, at tbl.7.
process. 272 It is reasonable to assume that the gap between the

World Bank starting point and the IBBI starting point should be
measured in months, and almost certainly less than a year. On the
other end of the timeline, the World Bank resolution date is the
payment of some of the bank's debt.273 The IBBI end date is likely
prior to any recovery by the creditor, but at least some payment
should be received shortly thereafter. Once a plan is approved by
the NCLT, it is binding on all parties and becomes the new pay-
ment schedule. 274 If a liquidation order is entered, the liquidation
of assets begins immediately and creditors have only thirty days to
file a claim. 275 Liquidators are further incentivized to act quickly
because their compensation is dependent on how long it takes to
make distributions. 27 6 In either case, financial creditors should
receive some payment within a few months, if not sooner.
CASE LENGTH MEASUREMENT TIMELINES

IBC Plan
IBC Approved/ First
Default Application Liquidation Payment Debtor
Date Filed Order Received Dissolved
World Bank
Hypothetical
Resolutions
Involuntary
Liquidations
Voluntary
Liquidations
Visual Aid Only - Not to Quantitative Scale
272. See Non-Performing Assets infra Part III.B.4.

274. See Insolvency and Bankruptcy Code, No. 31 of 2016, INDIA CODE (2016), § 31(1).
When the data for 2019 India Report were collected, CIRP Regulations required payment
to operational creditors no later than thirty days after plan approval. Insolvency and Bank-
ruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations,
2016, Gazette of India, pt. III sec. 4, § 38(1)(b) (as amended up to July 25, 2019). That
provision has since been removed, Insolvency and Bankruptcy Board of India (Insolvency
Resolution Process for Corporate Persons) (Fourth Amendment) Regulations, 2018,
Gazette of India, pt. III sec. 4, ¶ 6 (Oct. 5, 2018), but the IBC has also been amended to
require that all resolutions must be completed within 330 days from the insolvency com-
mencement date. Insolvency and Bankruptcy Code (Amendment) Act, 2019, No. 26, § 4,
Acts of Parliament, 2019 (India) (amending Insolvency and Bankruptcy Code § 12), http:/
/www.egazette.nic.in/WriteReadData/2019/210234.pdf [https://perma.cc/8A3J-R9YS].
276. Insolvency and Bankruptcy Board of India (Liquidation Process) (Amendment)
Regulations, 2019, Gazette of India, pt. III sec. 4, § 4 (as amended up to July 25, 2019).
First, to compute the mean case length for each category, the
total case lengths in a category are added and then divided by the
number of cases in that category. For the ninety-eight cases where
a plan was approved (a resolution), the mean case length was 322
days (0.88 years).277 Using bins of sixty in a frequency distribution,
the mode was 241-300 days. 278 This was expected, as the IBC
requires any resolutions to be approved within 180 days, or 270
days at the longest, and the 270-day deadline is within the modal
bin. 279
The mean was affected by outliers on the longer side. This is
curious at first blush because the 270-day deadline should push any
cases not resolved by that deadline into the liquidation category.
The explanation could lay mainly in the initial rounds of appeals
related to eligibility and other issues. Because the parties in those
cases had the burden of seeking the first answers to unclear sys-
temic questions, often through multiple levels of appeal, the courts
granted individual dispensations in many of those cases by not
counting the time those cases were on appeal toward the resolu-
tion deadline. 28 0 The tolling periods for those interlocutory
277. The cases are detailed in a chart and frequency distribution table on file with the
author. The data points were derived from the ten volumes of the Insolvency and Bank-
ruptcy News newsletters that had been published by the IBBI as of March 31, 2019. Any
differences between the data in the chart and the newsletters are explained in the
endnotes to the chart.
278. See id. (calculating from the number provided).
279. The 180-day deadline may be extended once, for no more than ninety days. Insol-
vency and Bankruptcy Code §§ 12, 33.
280. See, e.g., Vijay Kumar Jain v. Standard Chartered Bank, (2018) Civil App. No. 8430,
118 (India), https://main.sci.gov.in/supremecourt/2018/30947/3094 7 _2018Judge-
ment_31-Jan-2019.pdf [https://perma.cc/B34S-HER6] ("the time ... utilized in ... pro-
ceedings must be excluded from the period of resolution process of the corporate
debtor"); Chitra Sharma v. Union of India, (2017) W.P. (Civil) No. 744, 11 39, 42 (India);
Quinn Logistics India Pvt. Ltd. v. Mack Soft Tech Pvt. Ltd., Company Appeal No. 185 of
2018, ¶ 11, NCLAT, New Delhi (Apr. 27, 2018) ("[W]e hold that the 'Committee of Credi-
tors' . .. rightfully requested ... to exclude the period [stayed due to interim order] for
the purpose of counting the total period... ."). The IBBI expects case lengths to shorten
now that many of the admission issues have been resolved:
[W]hen we started the process in the initial days, there was a lack of clarity on
many matters . . . . The admission stage started in the first quarter of 2017. At
that time we found people going to the NCLT, high court, supreme court. But
today those admission related matters have been fairly streamlined. All conten-
tious issues are settled, and admission process has become smooth .... Similarly,
we are now passing through the approval stage . . ..
Menaka Doshi, IBC: Why Resolution PlansAre Unsuited to an Auction According to India'sInsol-
vency Regulator IBBI's Sahoo, BLOOMBERG QUINT (May 1, 2018, 9:42 AM), https://
www.bloombergquint.com/insolvency/ibc-why-resolution-plans-are-unsuited-to-an-auction-
according-to-indias-insolvency-regulator-ibbis-sahoo [https://perma.cc/DDH2-B7N5]
(Interview by Menaka Doshi with Dr. M.S. Sahoo, IBBI Chairperson).
appeals are not reflected here because the IBBI measures case
length from the day the case is filed through the resolution date,
regardless of any periods tolled in the interim. This number is
expected to move back toward the deadline as more of the initial
issues are resolved and the tolling dispensations stop.
For the 378 cases resulting in an order of liquidation, the mean
case length was 281 days (0.77 years).281 Again using bins of sixty,
the mode was 181-240 days. 28 2 This result was also expected as
that bin falls immediately outside the 180-day deadline. The mean
was affected by outliers for the same reason as the resolution
category.
For the forty-one voluntary liquidation cases, the mean case
length was 375 days (1.03 years).283 As explained below, this figure
should be interpreted differently from the other IBC categories
because the IBBI reports a different end date for voluntary
liquidations.
Then, to calculate the total mean case length for all cases, the
total case lengths for all completed IBC cases are added and then
divided by the total population of 571. This yields a mean of 295
days (0.81 years) for all cases that have been completed under the
IBC.
281. A table deriving data points from the ten volumes of the Insolvency and Bankruptcy
News that had been published by the IBBI as of Mar. 31, 2019 is on file with the author.
282. Id.
283. A cumulative table of the voluntary liquidation cases is included as tbl.15 of IBBI's
quarterly newsletter. See Individual Insolvency: The Next Big Thing, supra note 115, at 17
tbl.15.
AVERAGE CASE LENGTH

5
4.5 4.3
3.5
.a2.5
E 1.5
1.03
0.88 0.77 0.81
1
0.5
A
0
Resolutions Involuntary Voluntary Total Actual World Bank
Liquidations Liquidations Cases
'WB Fore1 11t

(e1t
An additional "total actual cases" category can be computed in

the same manner but with voluntary liquidations excluded.
Excluding voluntary liquidations prevents those cases from skewing
the data in several ways. Voluntary liquidations should be the
"easy," i.e., quick, cases, as those debtors file a voluntary IBC appli-
cation, and the case is a liquidation from the beginning. One of
the IBC requirements for a voluntary liquidation is that the debtor
must show that it will be able to pay its debts in full from the pro-
posed liquidation proceeds, which it must prove with audited
financial statements and an asset valuation report prepared by an
independent appraiser. 284 Once those reports are ready, debtors
have four weeks to pass a final resolution seeking liquidation, and
two-thirds of the creditors must approve the resolution within
seven days thereafter (which should be easily obtained, as the cred-
itors are being paid in full). The liquidator then begins selling all
assets and winding up the affairs of the company. Once this pro-
284. Insolvency and Bankruptcy Code § 59(3).

cess is complete, the liquidator applies to the NCLT for an order

dissolving the debtor. 285
These cases should move faster because the debtor and its credi-
tors are not at odds. At the same time, the reported case lengths
for voluntary liquidations run through the day the company is dis-
solved, which is well after creditors have received payment (the
World Bank end date) and even longer after the order of liquida-
tion (the IBBI end date for the other categories). Further, another
requirement for voluntary liquidations is that the debtor must not
be in default with any creditor. 28 6 That means that while the start
date aligns with the other IBBI start dates (date of application), it
also aligns with the World Bank start date (the first date there is a
payment issue). While voluntary liquidations should be faster than
the other cases, the voluntary liquidation case endpoints used by
the IBBI measure events that occur later than any of the other
endpoints, which further skews the data. The longer time horizon
explains why these "shorter" cases appear to last longer than the
contested cases. The mean for all IBC cases excluding voluntary
liquidations was 288 days (0.79 years).
AVERAGE CASE LENGTH EXCLUDING VOLUNTARY LIQUIDATIONS
5
'
4.5 4.3
S4.5
4
C 3.5
3
a 2.5
2 1.58
U 1.5
1 0.79
V0.5
0
Actual Cases Actual Cases x 2 World Bank Estimate
If excluding the voluntary liquidations is a better measure of the

true length of IBC cases thus far, then actual cases are being com-
pleted at a rate several times faster than the World Bank is report-
ing. While this average indicates that actual cases are lasting less
285. Id. § 59(7).

286. Id. § 59(1).
than 20% of the time reported by Doing Business,287 the World

Bank's longer measurement horizon must be considered. Even if
the average actual case length is doubled to account for the differ-
ent timelines, actual cases are lasting less than 40% of the time the
World Bank is reporting. 288
2. Recovery Rates
There is a huge gap in actual recovery rate data because the IBBI
does not publish recovery rates for involuntary liquidations. This is
a significant limitation on the comparison with Doing Business
recovery estimates for two reasons. First, almost three of every four
IBC cases thus far have resulted in an involuntary liquidation. 28 9
Second, it is expected that involuntary liquidations yield the lowest
recovery rate among the three categories. Given that liquidations
have comprised 73% of all completed IBC cases, the absence of
this data cannot be overstated. The overall recovery average would
almost certainly be less, but there is no way to know how much less.
The percentage of involuntary liquidations should go down over
time, as 263 of these 378 (70%) corporate debtors were no longer
operating when their IBC applications were filed, and many had
been defunct for years. 290 The government expected this to
occur, 29 1 and often points to the effect these debtors are having on
recovery rates in the short term. 292 As the backlog of zombie com-
panies are purged and defaulting debtors enter the IBC process
earlier, it should result in more, higher-yielding resolutions. 293
287. 288 actual days/1,570 World Bank estimate = 0.18.

288. 576 actual days/1,570 World Bank estimate = 0.37. That said, the 2020 India
Report did report an average case length of 1.6 years. 2020 INDIA REPORT, supra note 38, at
110.
289. 378 involuntary cases/517 total cases = 0.73.
290. A table containing this information is on file with the author.
291. See Non-Performing Assets infra Part III.B.4.
292. See Insolvency Profession: An Institution in the Making, INSOLVENCY & BANKR. NEWS
(Insolvency & Bankr. Bd. of India, New Delhi, India), Jan.-Mar. 2018, at 15; Balancing the
Interest of Stakeholders, INSOLVENCY & BANKR. NEWS (Insolvency & Bankr. Bd. of India, New
Delhi, India), July-Sept. 2017, at 8-9. Even among the ninety-eight resolutions, twenty-nine
were defunct at the time of filing. The average recovery rate in those cases was fourteen
cents on the dollar. This is not an inference that this percentage could be used as a substi-
tute for the involuntary liquidation recovery average because 30% of involuntary liquida-
tions were not defunct companies. Given the low recovery rate in the defunct cases,
recovery rates in the remaining 30% could raise the overall average significantly. Also, the
available data do not reveal the type of assets that were liquidated. For example, real estate
values could be relatively unchanged by dormancy while equipment values might drop
dramatically. A table containing this involuntary liquidation data is on file with the author.
293. Even involuntary liquidations generally yield higher recoveries when the assets
have not been dormant for many years.
That said, the data set presented herein is incomplete with no real
explanation why. 29 4
The IBBI does report creditor recovery rates for voluntary liqui-
dations and resolutions, again on the individual case level. These
recovery rates can be compared directly with the World Bank
figures, as both the World Bank and the IBBI report recovery rates
by lenders, but no other creditors. The IBBI reports reference
recovery rates by "financial creditors." A financial creditor is any
295
person to whom a "financial debt" is owed. A financial debt
under the IBC falls within the commonly understood definition of
a lender who expects repayment of principal with interest. The
Doing Business methodology measures "cents on the dollar recov-
ered by secured creditors." 296 Both measurements are incomplete,
in that both exclude vendors, employees, and other creditors and
are therefore not measuring the total recovery rate. But direct
comparison is possible because both measure the same strata of
debt.
For resolution recovery rates, after first removing one case with
incomplete data and one outlier with a reported realization rate of
over 400%,297 the sum of the realizations of financial creditors is
divided by the sum of the total claims of financial creditors. The
result is a realization rate of 42.97%, or forty-three cents on the
dollar. This is a gross rate, whereas the World Bank reports net
recoveries. To compare the IBBI number to the World Bank num-
ber more directly, the net recovery rate can be calculated using the
applicable steps in the World Bank methodology. The first step is
298
to reduce the gross recovery by the costs of the proceedings.
Because the IBBI does not report actual costs for resolutions, one
can use the same deduction used by the World Bank in the 2019
294. Efforts to obtain access to liquidation recovery rates from the IBBI have been
unfruitful. Unlike resolutions, where recoveries are all detailed in the plan, liquidation
recoveries are not known until after the fact and must be compiled and reported by the
liquidator. But this is true for both voluntary and involuntary liquidations. Voluntary liqui-
dations, with recovery rates exceeding 100%, are reported in the quarterly IBBI newslet-
ters. The same information could be reported in the same manner for involuntary
liquidations, but at least for the data set in this Article, it has not been. See infra note 351.
Newsletters, INSOLVENCY AND BANKRUPTCY BOARD OF INDIA: PUBLICATIONS, https://
ibbi.gov.in/publication (last visited Nov. 25, 2020).
295. Insolvency and Bankruptcy Code, No. 31 of 2016, INDIA CODE (2016), § 5(7)-(8).
This is compared to operational creditors. Id. § 5(20)-(21).
297. Those cases are identified in the endnotes to a table containing resolution case
data on file with the author.
India Report, which is 9.0%.299 Consistent with the World Bank's

method, one cent is deducted for each percentage point, which
reduced the recovery rate to 33.97. The World Bank methodology
then applies a 20% annual depreciation rate to a quarter of the
assets. 300 That step can be skipped as the IBBI figures are real
recoveries at the end of cases, so any depreciation in value has
already been factored into the recovery. 30 1 The net recovery rate is
the present value of the remainder. In the 2019 India Report, the
World Bank used a lending rate of 9.51% to determine present
value.3 0 2 Applying that lending rate to the average resolution case
length of 0.88 years resulted in a net recovery rate of approxi-
mately 0.31%, or thirty-one cents on the dollar. 303 If the average
case length is doubled (an approximation) to account for the
longer World Bank timeline, the net recovery rate is approximately
twenty-nine cents on the dollar. 304
The voluntary liquidation recovery rate is simpler-all creditors
must be paid in full to use this process. 305 The data confirm this.
All voluntary liquidation claims were fully paid and after deducting
actual expenses (which are reported for those cases), there was sur-
plus returned to equity in almost every case. 306
The absence of involuntary liquidation recovery rates is fatal to
any attempt to determine an overall average for completed IBC
cases. Without recovery rates for three-fourths of the cases, an
analysis of the overall actual case recovery rates would be meaning-
less. Sampling is not useful because the resolution and voluntary
liquidation cases are not representative of the involuntary liquida-
tion cases. It is expected that the latter's recoveries would be much
299. 2019 INDIA REPORT, supra note 38, at 94, 98. Consistent with the World Bank
methodology, the assumption is made that expenses were incurred at the end of the case
and that no additional value was generated during the case. See Simeon Djankov, Oliver
Hart, Caralee McLiesh & Andrei Shleifer, Debt Enforcement Around the World, 116 J. POL.
EcoN. 1105, 1119 (2008).
301. This is a significant "savings" compared to the World Bank figures, as the 20%
depreciation rate is annual and the World Bank assumes a case length of 4.3 years. Id; see
supra note 12.
PV = 3397
303. 33PV-(1+.0951) 88
.3397
304. PV = (1+0951)176
305. Insolvency and Bankruptcy Code, No. 31 of 2016, INDIA CODE (2016), § 59(3).
306. Individual Insolvency: The Next Big Thing, supra note 115, at 17 tbl.15. In many of
these cases, there were no claims. Ownership used the IBC process as a streamlined mech-
anism to allow an insolvency professional to liquidate the company's assets and wind up its
affairs. After payment of case expenses (including the liquidator's fee), equity received all
proceeds. A table containing this voluntary liquidation case data is on file with the author.
lower, but how much lower is unknown. The Indian Supreme

Court recently found that average realization rates in resolution
cases are approximately 202% of liquidation values.31 7 Those num-
bers were not tested, as the liquidation values were based on valua-
tions/appraisals in resolution cases, not liquidations. Sale prices
often materially differ from appraised values. That said, a net
recovery rate for involuntary liquidations that is less than half that
of resolutions would likely mean the overall average is much less
than the Doing Business estimate of twenty-six cents on the dollar.
Perhaps it is not that low. Without the IBBI data, there is no way to
know.'' 8
AVERAGE RECOVERY RATES
100
100
90
C 80
-e
- 70
O 60
S50
Q 40
31 29
30
S20
10
0
Resolutions Voluntary Involuntary World Bank
Liquidations Liquidations
14'otid Bank hstintate
The recovery rate comparisons are not definitive and are cer-
tainly less useful than the case length comparisons. Still, the recov-
ery reports from the IBBI provide additional data and have the
307. Swiss Ribbons Pvt. Ltd. v. Union of India, (2018) W.P. (Civil) No. 99, ¶ 86 (India),
https://main.sci.gov.in/supremecourt/2018/4653/4653_2018_ludgement_ 25-jan-
2019.pdf [https://perma.cc/4UY-CE9S].
308. See generally Feibelman & Sane, supra note 40 (calling for a maximalist approach to
IBC data collection and dissemination while noting the deficiencies thus far).
advantage of being grounded in fact. Both the case length and

recovery reports allow observers to take a more holistic view of the
real effect the IBC is having in India. Lenders, investors, and aca-
demics should focus on that data as the new law matures over the
next few years and more borrowers complete the process. The
next Subpart shows that those who control the flow of capital are
already taking note of the improved environment under the IBC.
3. Increased Capital Flows
Lending decisions are multifaceted. Lenders underwrite loans

based on hard data related to each borrower and each loan. Lend-
ers consider collateral values, borrower payment histories, guaran-
tor net worth, and other factors when deciding whether to make a
loan. Those same criteria are overlaid against the market to deter-
mine the appropriate loan terms. But lending decisions are also
made against a backdrop of the parties' relative rights and reme-
dies, and the possible outcomes, if a borrower defaults on a loan.
A lender's perception of its legal options in the event of a default
also affect whether the loan is made, and if so, the terms of the
loan. The IBC enhanced creditors' rights and streamlined the
recovery process. Since enactment of the law, aggregate commer-
cial lending has increased every year.
The Reserve Bank of India tracks and reports the "Flow of Finan-
cial Resources to Commercial Sector" to monitor commercial lend-
ing to domestic companies. For fiscal year (FY) 2014-15,309 loans
totaling 25.850 trillion were made by Indian domestic banks to
Indian companies not in the food sector. 3 10 Lending increased to
27.754 trillion in FY2015-16, then dipped to 24.952 trillion in
FY2016-17, the year the IBC was enacted. 311 In FY2017-18, domes-
tic bank lending increased to 29.161 trillion and, in FY2018-19, to
212.3 trillion. 31 2 Domestic commercial lending in the last two fiscal
309. India's fiscal year runs from April 1 to March 31. South Asia: India, The World
Factbook, https://www.cia.gov/library/publications/the-world-factbook/geos/in.html
[https://perma.cc/4WF6-V5DQ] (last visited Nov. 25, 2020).
310. RESERVE BANK OF INDIA, RESERVE BANK OF INDIA ANNUAL REPORT 2016-17, at 39
tbl.II.6 (2017), https://rbidocs.rbi.org.in/rdocs/AnnualReport/PDFs/RBIAR201617_
FElDA2F97B1B21C4EA66250841F.pdf (https://perma.cc/E4V5-YBYQ] [hereinafter
ANNUAL REPORT 2016-17].
311. RESERVE BANK OF INDIA, RESERVE BANK OF INDIA ANNUAL REPORT 2017-18, at 53
tbl.II.3.3 (2018), https://rbidocs.rbi.org.in/rdocs/AnnualReport/PDFs/ANREPORT20
171807774EC9A874DB38C991F580ED14242.pdf [https://perma.cc/K7SP-LGDA] [here-
inafter ANNUAL REPORT 2017-18].
312. ANNUAL REPORT 2016-17, supra note 310, at 39 tbl.II.6; RESERVE BANK OF INDIA,
RESERVE BANK OF INDIA ANNUAL REPORT 2018-19, at 53 tbl.II.3.3 (2019), https://rbidocs.rbi.
years-the two full fiscal years since the enactment of the IBC-has
set successive new ten-year highs.
Foreign inflows of capital are also on the rise, albeit more mod-
estly. In FY2014-15, foreign capital sources (in the form of lend-
3 13
ing or direct investment) totaled 22.264 trillion. Over the next
four fiscal years, it increased every year, first to 22.459 trillion, then
to 22.758 trillion, up to 23.385 trillion, and finally to 23.867 trillion
in FY2018-19. 3 14 Again, each of the last two fiscal years saw new
ten-year highs.
Domestic capital from non-bank sources has been up and down.
In FY2014-15, domestic non-bank capital flows totaled 24.740 tril-
lion. 315 It then dropped to 23.782 trillion in FY2015-16,316 rose to
26.789 trillion in FY2016-17, then rose again to 28.219 trillion in
3 18
FY2017-18. 31 7 In FY2018-19, it dropped to 5.474 trillion.
The aggregate flow of resources to Indian companies is on the
3 20
rise. 319 In FY2014-15, it was 212.855 trillion. Over the next four
32 1
fiscal years, it rose to 213.995 trillion, then again to 214.500 tril-
lion and 220.764 trillion, and finally to 221.642 trillion in
FY2018-19. 322 The last two fiscal years have again set successive
ten-year highs.
org.in/rdocs/AnnualReport/PDFs/ANNUALREPORT2018193CB8CB2D3DEE4EFA
8FOF6BD624CEDE.pdf [https://perma.cc/B67UYQ8C] [hereinafter ANNUAL REPORT
2018-19].
313. ANNUAL REPORT 2016-17, supra note 310, at 39 tbl.II.6.
314. ANNUAL REPORT 2018-19, supra note 312, at 53 tbl.II.3.3; ANNUAL REPORT 2017-18,
supra note 311, at 53 tbl.II.3.3.
316. ANNUAL REPORT 2017-18, supra note 311, at 53 tbl.II.3.3.
318. Id.
319. The aggregate figures reported by the Reserve Bank of India (RBI) include loans
made by domestic bank lenders, domestic non-bank lenders, and foreign lenders. E.g., id.
Those figures also include foreign direct investment, which has fluctuated between X2.265
trillion and 23.867 trillion during the years reported. Id.; ANNUAL REPORT 2016-17, supra
note 310, at 39 tbl.II.6. Direct investment by all domestic sources is not included, although
public issues and private placements by non-financial entities are incorporated among the
domestic non-bank sources. ANNUAL REPORT 2018-19, supra note 312, at 53 tbl.II.3.3. This
does not include privately capitalized companies or the entire spectrum of direct invest-
ment in micro, small, and medium enterprises. MSMEs contribute approximately 29% of
India's GDP. See MINISTRY OF MICRO, SMALL & MEDIUM ENTERs., supra note 75, at 22.
FLOW OF RESOURCES INTO INDIA'S COMMERCIAL SECTOR
2 25 -________
b 20
15
0
x 0 FY 2016-17 FY 20 17-18 FY 2018-19
U Foreign Sources 2.758 3.385 3.867
<Domestic Non-Bank 6.656 8.219 6.021
Sources
U Domestic Bank Lending 4.952 9.161 12.3
Domestic Bank Lending Domestic Non-Bank Sources I Foreign Sources
The Supreme Court of India has attributed this increased invest-

ment to the success of the IBC. In a recent opinion upholding the
constitutionality of several IBC provisions, the Court referenced
some of these figures and stated:
We are happy to note that in the working of the Code, the
flow of financial resource to the commercial sector in India has
increased exponentially as a result of financial debts being
repaid .... These figures show that the experiment conducted
in enacting the Code is proving largely to be successful. The
defaulter's paradise is lost. In its place, the economy's rightful
position has been regained.32 3
There is some support for the Supreme Court's view that the IBC
is responsible, at least in part, for the loosening of lenders' purse
strings. Other than legal reforms (including reforms other than
the IBC), there have been no major events that readily explain the
upward trend in the flow of commercial capital. While growth has
been robust, it has also been stable. No spikes or significant
upward trends in GDP have appeared since 2016.324 The central
323. Swiss Ribbons Pvt. Ltd. v. Union of India, (2018) W.P. (Civil) No. 99, ¶ 86 (India),
https://main.sci.gov.in/supremecourt/2018/4653/4653_2018_judgement_25-Jan-
2019.pdf [https://perma.cc/4U2Y-CE9S]. The court references figures from the RBI but
does not cite the chart referenced at note 297. See id. The numbers referenced with so
much optimism in the opinion appear to be understated when compared to the RBI chart.
324. India's methodology for measuring GDP growth has been questioned recently,
leading its former Chief Economic Advisor to conclude that a downward adjustment to
figures reported over much of the last decade is warranted. Arvind Subramanian, India's
CDP Mis-Estimation: Likelihood, Magnitudes, Mechanisms, and Implications 4-5 (Harvard Univ.
Ctr. for Int'l Dev., CID Faculty Working Paper No. 354, 2019), https://grow-
thlab.cid.harvard.edu/files/growthab/files/-06-cid-wp-354.pdf [https://perma.cc/N8AX-
government has remained stable with the re-election of Prime Min-

ister Modi in May 2019 and a continued majority for his Bharatiya
Janata Party. No wars have begun or ended. No major financial
crises have erupted or eased. 325
Lenders may now be taking a broader view during the underwrit-
ing process. Prior to the IBC's enactment, the Bankruptcy Reforms
Committee recognized that Indian capital markets were choked by
weak rights that ultimately led to liquidation:
Hence, lending in India is concentrated in a few large compa-
nies that have a low probability of failure. Further, secured
credit dominates, as creditors' rights are partially present only in
this case. Lenders have an emphasis on secured credit. In this
case, credit analysis is relatively easy: It only requires taking a
view on the market value of the collateral. As a consequence,
credit analysis as a sophisticated analysis of the business prospects
3 26
of a firm has shriveled.
In other words, lenders routinely refused to consider going con-
cern values, instead focusing only on individual asset values. The
Committee sought to change that mindset through the IBC. Even
though management is removed during the process, the goal is to
sell the company-not just the assets-to a new buyer. In this way,
the going concern value is preserved and recovery rates should be
higher. The expectation of higher recovery rates leads to the mak-
ing of more loans.
Alternatively, increased capital availability may be an example of
how perception is helping to create economic reality. The govern-
ment's stated goal was to break into the top fifty of the World Bank
rankings. This was an understandable goal that is easily tracked
using a benchmark recognized in capital markets around the
world. The adoption of a comprehensive bankruptcy code was one
of the means to achieve that end. Related to that was shortening
debt resolution times and increasing recovery rates. But cracking
the top fifty was not the actual goal-it was just another means.
One only needs to ask why breaking into the top fifty was impor-
tant to see that it was not the ultimate goal.
The real goal was to spur capital markets to stimulate develop-
ment. If creditors believe the IBC has created a friendlier collec-
J4PM]. The adjustment would "alter our understanding of India's growth performance
after the Global Financial Crisis, from spectacular to solid." Id. at 1-4.
325. At the time of writing and during the data sets used herein, the COVID-19 pan-
demic with its attendant economic impacts had not reached India.
326. BANKRUpTCY LAw REFORMS COMMITTEE REPORT, supra note 5, § 2 (emphasis in
original).
tion environment, that may explain why loan volume is increasing.

Recovery times are clearly shortening. Recovery amounts may be
relatively unchanged so far, but this has not impeded the increased
flow of capital, and thus, has not thwarted the ultimate objective.
The passage of the IBC and the subsequent rise in World Bank
rankings may have had a placebo effect. Or it may be that credi-
tors are simply taking the longer view and know that mechanisms
are now in place to protect their investments, and that the recovery
numbers will eventually bear that out. Regardless, if capital is flow-
ing more freely (the ultimate aim) because the IBC is perceived to
have worked, then it in fact worked.
4. Non-Performing Assets
One of the problems caused by ineffectual recovery options was

an unwillingness by banks to commit resources to recovery efforts,
or to even acknowledge bad loans. Around the same time the gov-
ernment began to get serious about reforming the insolvency pro-
cess, the RBI also began to highlight issues with bad loans held by
32 7
its banks. Charged with the responsibility of supervising banks,
the RBI began to modernize its tools after the global financial cri-
sis.328 The RBI determined that high levels of non-performing
assets (NPAs) threatened not only the health of the banks but also
the Indian economy as a whole. These issues became apparent as
the RBI began moving away from a backward-looking model with
32 9
built-in lag times and toward a risk-based supervision model.
The new forward-looking model was instrumental in identifying
how risk was building in the banking system.
The new model also helped the RBI identify other sources of
stressed assets in the banking system that did not show up in NPA
reports-restructured loans and write-offs. 330 In the years prior to
the global crisis, the overall credit regulatory environment had
become more lax. In 2008, a special dispensation allowed banks to
classify restructured loans as performing loans, thus keeping those
327. Nearly 70% of India's banking assets are held by twenty-one state-owned lenders.
Manju Dalal, India Pumps Up Fraud-HitLender, WALL ST. J., July 25, 2018, at B10. This puts
the government in a complicated position-it is both the guardian of the financial system
and its largest stakeholder. Id.
328. RESERVE BANK OF INDIA, REPORT ON TREND AND PROGRESS OF BANKING IN INDIA
2012-13, at 4 (2013), https://rbidocs.rbi.org.in/rdocs/Publications/PDFs/
ORTPZ1112013_F.pdf [https://perma.cc/2Q23-Y3QL].
329. Id. at 4-5.
330. See id. at 7-8.
loans out of the NPA category. 33 1 This dispensation incentivized

banks to continually restructure loans, even those that were clearly
not viable (known as "evergreening").332 Banks also increasingly
used write-offs to lower their NPA numbers. This accounting tool
allowed banks to remove loans from their asset lists and take a loss
for tax purposes. More importantly for reporting purposes, banks
could remove written-off loans from the NPA list. 333 The increas-
ing use of these two tools meant that the Indian banking structure
was more stressed than NPA reports indicated.
The quicker a problem loan is identified, the better that loan
can be managed and the more likely it can be returned to a per-
forming status. Conversely, asset values tend to deteriorate quickly
once a loan goes bad. A movement thus began to strengthen bank-
ing regulation around credit monitoring and management. Calls
came for stricter credit monitoring and a robust database so prob-
lem assets could be identified earlier. Regulators wanted each
restructured loan reviewed for viability within a strict timeframe.
Loans adjudged to be unviable were to be sent for recovery. 334
Above all, the RBI wanted to both identify and flush out bad loans
quickly. This initiative began in earnest in 2014 through several
directives and RBI circulars. 335 Reported NPAs began to increase
immediately, with higher percentages reported every six months,3 3 6
as more regulations were issued. On March 31, 2014, the reported
gross NPA ratio of all scheduled banks was 4%. By September
2014, it had risen to 4.5%. A steady rise continued for each of the
331. Dr. K.C. Chakrabarty, Deputy Governor, Reserve Bank of India, Two Decades of
Credit Management in Indian Banks: Looking Back and Moving Ahead 4 (Nov. 16, 2013),
https://rbidocs.rbi.org.in/rdocs/Speeches/PDFs/NPA181113BS.pdf [https://perma.cc/
L7NC-ZKW8].
332. Id. at 10.
333. Id. at 8 (noting that the bank was free to continue attempting to collect the debt).
The average recovery rate on written-off debts was less than 10%. Id. Write-offs consist-
ently accounted for around 50% of non-performing assets (NPA) reduction. Id.
334. Id. at 19-24. This was before the IBC, so recovery efforts were limited to the old
laws, such as the SARFAESI Act. Id.
335. See SAURAV SINHA, RESERVE BANK OF INDIA, RESOLUTION OF STRESSED ASSETS
-
REVISED FRAMEwORK Annex-3 (Feb. 12, 2018).

336. The RBI issues Financial Stability Reports every six months, in June and Decem-
ber of each year. Financial Stability Reports, REs. BANK INDIA, m.rbi.org.in/Scripts/FsRe-
ports.aspx# [https://perma.cc/GSL8-QCUX] (last visited Aug. 18, 2020). The reports
include snapshot figures for NPAs as of the last day of the fiscal year (March 31) and the
halfway point (Sept. 30). See id.
next six reporting periods, climbing to 10.2% in September

2017.337
This effort eventually led Parliament to amend the Banking Reg-
ulation Act of 1949 to give the RBI the authority to issue regula-
tions for the resolution of stressed assets, and to direct banks to
33 8
initiate the insolvency process with regard to particular defaults.
The RBI responded in two significant ways: first, it quickly issued
directions to lenders to initiate IBC proceedings for twelve of the
largest defaulters. 339 The twelve defaulting borrowers each had
debts of over Z50 billion and made up approximately a quarter of
NPAs, as measured by debt. 340 Many of those borrowers had fore-
stalled recovery efforts for years, but most have now been fully
processed through the IBC 341 :
337. Id. During this same period, U.S. banks' NPA percentages steadily dropped from
2.6% to 1.2%. FED. RES. BOARD, SUPERVISION AND REGULATION REPORT: MAY 2019, at 3
(2019).
338. The Banking Regulation (Amendment) Act, 2017, No. 30, Acts of Parliament,
2017 (India). The Amendment was symbiotic with the IBC. In an interview given around
the same time the Amendment was passed, the IBBI's Chairperson opined that manage-
ment's fear of losing control in a bankruptcy case would prevent defaults, and thus reduce
NPAs. To Avoid FutureBank NPA Crisis, Here's What Needs to Be Done, FIN. EXPRESS (Apr. 27,
2017, 6:22 AM), https://www.financialexpress.com/opinion/to-avoid-future-bank-npacri-
ses-heres-what-needs-to-be-done/643990/ [https://perma.cc/3KDA-LTZR] (Interview with
Dr. M.S. Sahoo, IBBI Chairperson).
339. Press Release, Reserve Bank of India, RBI Identifies Accounts for Reference by
Banks Under the Insolvency and Bankruptcy Code (June 13, 2017), https://
rbidocs.rbi.org.in/rdocs//PDFs/PR3363482A1FF9229F4B9A92EA0090D5D71518.PDF
[https://perma.cc/E3Y4-7QU5]. Further resolution case data for these borrowers is on
file with the author.
340. Id.
341. Id.
460owe The G.Wsh.Itl L. Reve[ol.r 52
Bhushan Steel Ltd. Resolution Order 5/15/18 63.49
Lanco Infratech Ltd. Liquidation Order 8/27/18 Unreported
Essar Steel Ltd. Resolution Order 3/8/19 60,70
Bhushan Power & Steel Ltd. Resolution Order 9/3/19 41.03
Alok Industries Ltd. Resolution Order 3/8/19 17.11
ABG Shipyard Ltd. Liquidation Order 4/25/19 Unreported
Jaypee Infratech Ltd. Still in the resolution process N/A
following successful appeal
Electrosteel Steels Ltd. Resolution Order 4/17/18 40.38
Amtek Auto Ltd. Resolution Order 7/25/18 34.38
Monnet Ispat and Energy Ltd. Resolution Order 7/24/18 26.26
yoti Structures Ltd. Resolution Order 3/27/19 50.02
Era Infra Engineering Ltd. Still in the resolution process N/A
following successful appeal
Second, the RBI later issued a Revised Framework for Resolution

of Stressed Assets (the "Revised Framework"), which repealed (but
liberally borrowed from) twenty-eight prior directives and circu-
lars. 342 The Revised Framework was not a part of the IBC, but was
clearly intended to supplement it with the same goal of expediting,
or even forcing, resolution of bad loans. Strict timelines for report-
ing defaults and seeking out-of-court resolutions were imposed. 343
If a large troubled loan could not be resolved quickly in a way that
allowed for a return to the standard performing asset category,
banks were required to file an application under the IBC. 34 4
The Revised Framework focused on large commercial loans, with
tiered reporting requirements depending on the size of the aggre-
gate indebtedness. For borrowers with an aggregate indebtedness
of Z5 crores or more, 345 lenders were required to identify any loan
immediately upon default. Those borrowers were reported to a
Central Repository of Information on Large Credits on a weekly
342. SINHA, supra note 335, at Annex-3, 1 1.

343. See id. 1 2.
344. The IMF, mindful of India's NPA problem, praised the move. See Press Release,
Int'l Monetary Fund, IMF Executive Board Approves India's 2017 Financial System Stability
Assessment (Dec. 21, 2017), https://www.imf.org/en/Publications/CR/Issues/2017/12/
21 /India-Financial-System-Stability-Assessment-Press-Release-and-Statement-by-the-Execu-
tive-45497 [https://perma.cc/P5AW-CBYC].
345. The threshold was the total of all loan balances among all lenders, not just
defaulted loans. On March 31, 2019, i5 crores was $721,700. See Exchange Rate for March
31, 2019, supra note 2.
basis. Lenders were required to file monthly reports designating

defaulted loans into one of three "Special Mention Accounts" cate-
gories: SMA-0 (any amounts overdue between 1-30 days), SMA-1
(31-60 days), and SMA-2 (61-90 days). 346 The ninety days were
essentially a grace period. If the loan could not be returned to a
non-default status within the ninety-day period, it was labelled an
NPA. 347 The new reporting requirements took effect in early 2018,
and reported NPAs peaked the next month at 11.6%.348 Since the
peak, the NPA ratio has fallen to 10.8% in September 2018 and
further to 9.3% in March and September 2019.349
SCHEDULED COMMERCIAL BANKs GROSS NPAs

14
12
10
-II
V
8
L.
6
0
4
Ncb
C4 s 4t 441h C
t t(
346. SINHA, supra note 335, 11 2-3.

347. Anand Tripurari & Ayushi Mishra, Resolution of Stressed Assets in India - An Analysis
of the New Framework, INDIA L.J. (2018), http://www.indialawjournal.org/resolution-of-
stressed-assets-in-india.php [https://perma.cc/ZZX8-AHNT].
348. Reserve Bank of India, FinancialStability Report, June 2018, CHAPTER II: FINANCIAL
INSTITUTIONS: SOUNDNESS AND RESILIENCE (June 26, 2018), https://www.rbi.org.in/scripts/
PublicationReportDetails.aspx?ID=906 [https://perma.cc/QJW2-QJ7Y]; Financial Stability
Report, supra note 336; see also SINHA, supra note 335 (circulating on Feb. 12, 2018), supra
note 336, § 2.4.
349. Reserve Bank of India, FinancialStability Report, June 2019, CHAPTER II: FINANCIAL
INSTITUTIONS: SOUNDNESS AND RESILIENCE (June 27, 2019), https://www.rbi.org.in/scripts/
PublicationReportDetails.aspx?ID=925 [https://perma.cc/G29W-6XHS]. FinancialStability
Reports, supra note 336.
To stop the evergreening game, all restructured accounts were

immediately downgraded to NPA status.35 0 To return to the stan-
dard category, restructured accounts were now subject to the same
strict conditions as other NPAs, plus additional requirements. For
an upgrade of restructured borrowers with aggregate debt of less
than Z1 billion (approximately $14.5 million), the borrower could
no longer be in default with any lender and all new loan documen-
tation had to be in place. For aggregate exposures exceeding Z1
billion, the same conditions applied, plus independent credit eval-
uation was required by a rating agency approved by the RBI. Only
restructuring plans receiving a credit opinion of RP4 could be
implemented. 35 1 For borrowers with an aggregate exposure of Z5
billion or more, RP4 ratings by two approved agencies were
required before implementation. 352
In addition to reporting stressed assets, banks were required to
implement resolution policies for all reported loans. A resolution
plan was deemed implemented only when the borrower was no
longer in default with any lender.3 5 3 For borrowers with largest
exposures, the Revised Framework went a step further. If NPAs for
borrowers with exposures of Z20 billion (approximately $288 mil-
lion) or more were not resolved within 180 days, lenders were
required to file an IBC insolvency application against all of those
borrowers. 354 This categorical mandate led to many borrowers
being pushed into the IBC process, 355 but it also led to a legal chal-
lenge by some of those borrowers.
On April 2, 2019, the RBI simultaneously won a victory and suf-
fered a minor setback in its NPA resolution efforts when the
Supreme Court of India issued its opinion in Dharani Sugars
&
Chemicals, Ltd. v. Union of India & Ors.3 5 6 In DharaniSugars, several

defaulting borrowers challenged the Revised Framework, contend-
350. SINHA, supra note 335, at Annex-1, 1 2.

351. Id. 1 6. Credit opinions ranged from RP1 to RP7. Id. at Annex-2. An RP4 opin-
ion means the proposed credit facilities carry a moderate degree of risk. Id.
352. Id. 1 6.
353. Id. 11 4-5.
354. Id. 1 9. In paragraph 12 of the Revised Framework, the RBI also announced its
intention to mandate deadlines for mandatory IBC applications for accounts between ti
billion and X20 billion. Id. at 1 12.
355. The tight timelines for reporting and resolution activity, coupled with strict
requirements for a return to performing status, likely means that fewer out-of-court
restructurings are taking place.
356. Dharani Sugars & Chems. Ltd. v. Union of India, (2018) Civil App. No. 66 (India),
https://main.sci.gov.in/supremecourt/2018/42591/42591_2018judgement_02-Apr-
2019.pdf [https://perma.cc/AZA2-M7V7].
ing that it was arbitrary and therefore unconstitutional. The bor-

rowers also claimed that the Revised Framework was ultra vires
because the RBI had exceeded its mandate under the Amendment
to the Banking Regulation Act. The court brushed aside the con-
stitutionality argument because Parliament had properly granted
oversight authority to the RBI in the Act, and the RBI had suffi-
cient guidelines to exercise that authority.3 57 The borrowers were
successful, to a limited extent, with the ultra vires argument. The
Act provided that the RBI could issue directions to lenders with
regard to a default-just as it did for the twelve specific borrowers
in June 2017.358 Because the Revised Framework provided that all
defaulting borrowers with exposures of Z20 billion or more, rather
than specific defaults by specific debtors, had to be resolved within
180 days or forced into bankruptcy, the RBI exceeded its authority
under the Act.3 59 While the court held that the "impugned circu-
lar will have to be declared ultra vires as a whole, and be declared of
no effect under the law," the holding was based only on the cate-
gorical requirement that all large loans be forced into the IBC pro-
cess after 180 days. The opinion effectively preserved the reporting
requirements.
The RBI lost little time in issuing a new framework, this one
known as the "Prudential Framework for Resolution of Stressed
Assets," which took immediate effect upon its issuance on June 7,
2019.360 The Prudential Framework restated the same NPA report-
ing requirements as the Revised Framework and declared that all
asset classifications that existed as of April 2, 2019 (the day Dharani
Sugars was decided) remained in effect. The one substantive
change in the Prudential Framework was made to comply with
DharaniSugars by removing the blanket IBC referral mandate and
by substituting a provision making clear that the RBI would issue
specific directions to initiate IBC proceedings against specific bor-
rowers in the future. 36 1
The takeaway is that the RBI was successful in strengthening
credit monitoring and in flushing bad debt through the system. As
expected, reported NPAs increased as credit monitoring regula-
tions tightened, and peaked just after the most stringent regula-
357. Id. at 35-45.

358. See Press Release, Reserve Bank of India, supra note 339.
359. Dharani Sugars & Chems. Ltd. v. Union of India, (2018) Civil App. No. 66, at
83-84 (India).
360. SAURAV SINHA, RESERVE BANK OF INDIA, PRUDENTIAL FRAMEWORK FOR RESOLUTION
OF STRESSED ASSETS 1 (June 7, 2019).
361. Id. at Annex-1, 1 5.
tions took effect.3 6 2 The banks were required to recognize and

report stressed assets, which also forced them to seek a resolution
of those loans. Many loans that were not viable and would never
return to a performing status were finally reported, and resolutions
were reached quickly out of court or through the IBC process. As a
result, bad loans are now trending downward as the backlog of
zombie borrowers exit the system. The tightened credit monitor-
ing regulations remain in place to prevent similar problems in the
future. The result is healthier banks, and in turn, more capital for
new and/or healthy businesses.
IV. CONCLUSION
The passage of a comprehensive insolvency code may prove to

have been a watershed moment for the Indian economy. The IBC
and the USBC are structurally similar, but different in priorities.
Indian bankruptcies now move faster and clearly favor creditors,
who make all major decisions. U.S. bankruptcies are geared
toward preserving debtors and their management. The differences
between the codes are easily discernable, and observers can make
their own normative judgments.
The main aim of this Article was to measure the IBC's success
relative to its goals or, at least, to explore different ways to measure
its success. While India's overall Doing Business rankings are up, its
bankruptcy score is relatively flat. Its Resolving Insolvency rank has
moved only from 121st three years before the IBC to 108th three
years after its passage. Many decisions are made based on these
rankings, and India is not getting the credit it deserves (no pun
intended) from these rankings. To start, the strength of insolvency
framework index is undercounted. Correctly scoring this half of
the Resolving Insolvency score would move India's rank in that cat-
egory to seventy-fourth. And the methodology for calculating the
recovery rate score is also concerning, specifically due to sampling
issues and the use of specific hypotheticals to generate guesses as to
an outcome.3 6 3
362. IMF, India: 2018 Article IV Consultation-PressRelease; Staff Report; and Statement by
the Executive Directorfor India, IMF Country Report 18/254, at 19, 1 35 (Aug. 2018).
363. It will be interesting to see if the reports catch up to reality (and what the lag time
is). As more cases move through the IBC, will more Insolvency Professionals be selected as
contributors? Will the responses then mirror the actual data, namely shorter case lengths
and different recovery rates? Will the results fluctuate from year to year? Will Mumbai and
Delhi report different scores? India's scores are certainly impacted, but the country and
category-specific case study in this Article raises larger questions about the Doing Business
methodology, or at least its lack of dexterity in recognizing changing conditions. Doing
It should go without saying that examining actual results is more

useful than projecting results based on hypotheticals. Data from
completed IBC cases reveal a mean case length of less than a year,
while DoingBusiness continues to consistently report over four years
to recovery. Even considering the longer time horizon measure-
ment, it is clear that IBC cases are significantly shorter than the
World Bank is reporting. What is less clear is how much creditors
are recovering. Here again, Doing Business has been remarkably
consistent in reporting a recovery rate of around twenty-six cents
on the dollar. Actual case data show that creditors in voluntary
liquidations are being paid in full, and resolutions are yielding net
recoveries somewhere between twenty-nine and thirty-one cents.
Involuntary liquidations are likely much less, but this will remain
unknown unless and until that data is released. The point is, none
of the actual numbers align with the DoingBusiness reports.
Other actual data indicate the success of the IBC. For example,
capital inflows have increased. In the two full fiscal years since pas-
sage of the IBC, domestic lending and foreign investment have set
successive ten-year highs. 3 64 This is not to say that the IBC is the
sole cause, but it appears to be a contributing factor or a case of
perception creating reality. The efforts of the RBI, which were
symbiotic with the provisions of the IBC, have resulted in a rise,
peak, and reduction of non-performing loans in the Indian bank-
ing system. Many of the zombie companies have been flushed
through the IBC process by a combination of the RBI's more strin-
gent reporting and resolution requirements, and the IBC's strict
timelines. The IBC's role in that can be debated, but Indian bank
balance sheets are cleaner since the IBC was passed.
In the three years since its passage, the IBC has evolved. An
amendment has been passed each year, and each amendment
made several significant changes. While some have viewed this as
evidence of a flawed original code,3 65 this is a systemic strength.
Business is, after all, meant to not only measure current conditions but also to encourage
and evaluate reforms. 2019 GLOBAL REPORT, supra note 43, at iv ("What gets measured gets
done . . . . Anchored in rigorous research and methodology, Doing Business gathers
detailed and objective data .. . helping governments diagnose issues in administrative pro-
cedures and correct them.").
364. See supra Part III.B.3.
365. Ravi Krishnan, 2018 Will Put to Test India'sBankruptcy Code, HINDUSTAN TIMES Jan.
11, 2018), https://www.hindustantimes.com/opinion/2018-will-put-to-test-india-s-bank-
ruptcy-code/iZAmHtvmqjSZh937TDZ3pL.html [https://perma.cc/T5R4-Y23Q ("It is
clear that the law has yet to fully demonstrate its effectiveness and is facing teething trou-
bles as seen from the frequent changes in the rules, the recent ordinance and amendment
bill.").
Any new comprehensive code, especially something as sweeping as

the IBC, will require adjustments. The frequent amendments show
India's agility in addressing unanticipated events and making
needed corrections. When early cases showed that a voting thresh-
old of 75% was too high for a committee of creditors to effectively
366
function, it was lowered to 66% for major decisions. When
policymakers realized that the strict prohibition on prior defaulters
was having a disparate impact on small business cases, that prohibi-
tion was lifted for those cases. 367 The regulatory side of the law also
continues to mature. The IBBI has recently recognized a new cate-
gory of insolvency professionals, the Insolvency Professional
Entity.36 8 Testing, monitoring, and disciplining continues as
increasingly more experts seek to be admitted to the insolvency
professional class.
Lawmakers have shown a responsiveness to court rulings. When
homebuyers were on the verge of losing their deposits and being
left with little to no voice in the case of a large developer, the strict
3 69
definition of "financial creditor" was expanded to include them.
When the NCLAT interpreted the IBC to grant equal distribution
rights to secured and unsecured creditors, 370 a clarifying amend-
ment protecting collateral rights passed both houses of Parliament
37 1
and received Presidential assent a month later.
Those same officials continue to wrestle with cross-border
issues. 37 2 While they continue to debate whether to adopt the
United Nations Commission on International Trade Law (UNCI-
TRAL) model law, the tide of globalization has begun to force the
issue. In May of 2019, the Noord Holland District Court entered
an order of bankruptcy against Indian airline Jet Airways. One
month later, the NCLT sitting in Mumbai refused to recognize the
Dutch proceeding, noting that sections 234 and 235 of the IBC had
366. Insolvency and Bankruptcy Code, No. 31 of 2016, INDIA CODE (2016), §§ 8, 16, 20,
21, 23.
367. Id. §§ 29A, 240A.
368. Insolvency and Bankruptcy Board of India (Insolvency Professionals) Regulations,
2016, Gazette of India, pt. III sec. 4, ch. V (as amended up to Apr. 24, 2020).
369. See Insolvency and Bankruptcy Code §§ 188-205; Chitra Sharma v. Union of India,
(2017) w.P. (Civil) No. 744, 1 2726 (India).
370. Standard Charter Bank v. Satish Kumar Gupta, R.P. of Essar Steel Ltd., Company
Appeal No. 242 of 2019, 1 172, NCLAT, New Delhi (July 4, 2019).
371. See Insolvency and Bankruptcy Code (Amendment) Act, 2019, No. 26, § 6, Acts of
Parliament, 2019 (India), http://www.egazette.nic.in/WriteReadData/2019/210234.pdf
[https://perma.cc/8J7P-7KGB].
372. See Insolvency and Bankruptcy Code §§ 234-35; State Bank of India v. Jet Airways
(India) Ltd., CP 2205/MB/2019, NCLT, Mumbai (India).
not been notified and were, therefore, not yet in force.37 The
NCLT declared the Dutch order a nullity in India and entered its
own order admitting Jet Airways as a corporate debtor under the
IBC. 374 The NCLAT, recognizing the problems that would inevita-
bly arise with regard to the assets located in the Netherlands (a
regional hub for the airline), set aside that portion of the NCLT's
order holding that the Dutch court had no jurisdiction. 375 The
panel encouraged cooperation between the Indian resolution pro-
fessional and the Dutch trustee, which ultimately resulted in a
"Cross Border Insolvency Protocol" approved by the NCLAT and
largely agreed to by the parties.3 7 6 In the absence of a statutory
mandate, the tribunal did an admirable job of balancing practicali-
ties and technical compliance with the IBC. Adoption of the
UNCITRAL model would provide greater clarity in the future for
the courts and the stakeholders. Without it, parties are left to
diplomacy for an effective resolution. That is not a recipe for cer-
tainty and speed, which are otherwise hallmarks of the IBC.
The continued evolution of the IBC makes it ripe for further
studies. Long-defunct companies may have skewed the initial data
on recovery rates, but those cases can be isolated by removing them
from the data pool. 377 Another solution might be to study bank-
ruptcy cases filed in 2019 and later, given that most of the non-
operational companies have now been purged through the system.
Eligibility cases may have skewed the initial data on case length, but
the case law reflects that most of those issues have also been
resolved. Again, studying only new cases would largely avoid cases
extended by litigation of eligibility questions of law (as would iso-
lating the old eligibility cases, although that would require a review
of every docket).
It will also be interesting to see what effect the IBC has on the
manner in which Indian companies are financed. Major capital
expenditures are usually financed through secured lending. This
is not expected to change given the extensive protections provided
to financial creditors in the IBC. But trade creditors are a different
story. Given the limited rights granted to operational creditors, it
373. State Bank of India v. Jet Airways (India) Ltd., CP 2205/MB/2019, NCLT,
Mumbai (India).
374. Id.
375. Jet Airways (India) Ltd. v. State Bank of India, Company Appeal No. 707 of 2019,
at 1-2, NCLAT, New Delhi (July 12, 2019).
376. Id.
377. The IBBI identifies defunct companies in the resolution reports. See, e.g., Insol-
vency Profession: An Institution in the Making, supra note 292, at 15.
may be that trade creditors push harder for stricter payment terms
or even cash on delivery. That, in turn, could lead to a shift from
trade credit to secured revolving lines of credit from the banks. It
would minimize the vendors' risk of loss and shift it to the financial
creditors, who are better protected by their collateral and their
ability to call the shots in a bankruptcy case. It could also lead to
an increase in firms' leverage ratios, leaving them further at risk of
a bankruptcy in the event of a downturn or more aggressive regula-
tion by the RBI. It bears monitoring to see whether the IBC leads
to changes in financing and changes in the percentages of finan-
cial versus operational creditors initiating IBC cases.
Finally, purging so many defunct companies has led to three-
fourths of the cases so far to result in liquidation. The liquidation
information disseminated by the IBBI is becoming more robust,
but more granularity is needed to allow stakeholders to make
informed judgments. Once that information is made available at
the individual case level, observers can compare liquidation and
resolution results, as well as calculate an aggregate recovery rate for
all cases. That would also allow for an apples-to-apples comparison
with the World Bank reports. The true efficacy of a mature IBC
can only be measured when all recovery rates are made available.

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Bluebook 21st ed.

ALWD 7th ed.

APA 7th ed.

Chicago 17th ed.

McGill Guide 9th ed.

AGLC 4th ed.

MLA 8th ed.

OSCOLA 4th ed.

HON. JASON D. WOODARD*

Motivated in part by its low rankings in the World Bank's annual

Vijay Mallya's birthday party lasted three days. The self-pro-

dollar.1 3 Both benchmarks were exceptionally poor by world

The pace at which India undertook studies, drafted, modified,

17. BANKRUPTCY LAw REFORMS COMMITTEE REPORT, supra note 5.

compiles financial information, solicits buyers for the company,

So why is this important to those of us in the United States, half a

IBC is effective, bits and pieces of it might further inform thinking

As a result, the Doing Business reports underappreciate the IBC's

II. A COMPARISON WITH THE USBC

A. ParallelStructures With Distinctive Details

breathing spell to formulate a plan. The IBC includes a similar

The drafters of both codes recognized that bankruptcy should

were outright fraudulent, as well as some deals that were simply

69. 11 U.S.C. § 548(a)(1)(A); Insolvency and Bankruptcy Code §§ 45-49.

successful only if the person who built the business continues to

B. The Unique Concepts

Each code has provisions that have no counterpart in the other

77. Id. § 240A.

The IBC divides creditors into two groups: financial creditors

85. Insolvency and Bankruptcy Code §§ 5(7), (8), (20), (21).

competence and ethics. 9 0 These are the Insolvency Professional,

appeal, to the Supreme Court of India-the third body to hear the

101. Insolvency and Bankruptcy Code § 62.

The differences in the codes highlight the differences in priori-

suspended, officers and employees report to the interim resolution

In the United States, the debtor, acting through its manage-

128. Insolvency and Bankruptcy Code §§ 7(3)(b), 9(4), 10(3)(b), 16.

extension, every impaired claimant) to vote on the plan.13 5 Accept-

135. 11 U.S.C. §§ 1122, 1126.

143. Id. § 1121(d).

146. Insolvency and Bankruptcy Code § 12.

leads to higher transaction costs because the firm's efficient model

III. THE RESULTS (THUS FAR)

So, is the IBC working? The answer is a matter of perspective.

153. Michelle J. White, The Costs of Corporate Bankruptcy: A U.S.-European Comparison, in

World Bank's efforts to quantify law and its effects on develop-

A. The Perceived Data: World Bank Rankings

The World Bank releases its Doing Business reports annually to

2014164 2015165 2016166 2017167 2018168 2019169

Enforcing Contracts 186 186 178 172 164 163

What is striking is not how much those categories improved, but

164. Id. at 10-13 (ranking 189 countries).

First, developing and passing a new bankruptcy code was one of

1. The Strength of Insolvency Framework Index

177. 2019 GLOBAL REPORT, supra note 43, at 23.

The index moves through four areas of a country's insolvency

185. 2019 GLOBAL REPORT, supra note 43, at 120.

i. Commencement of Proceedings Index

The commencement of proceedings index asks three questions,

191. 2019 GLOBAL REPORT, supra note 43, at 27.

" Whether creditors can initiate both liquidation and reorgani-

" What standard is used for commencement of insolvency pro-

Preliminary Study of India's Insolvency Regime

Preliminary Study of India's Insolvency Regime