There’s a saying in boardrooms: “We never saw it coming.” But the truth? Most companies do. They just don’t talk about it.
Before the Insolvency and Bankruptcy Code (IBC), 2016 entered the scene, insolvency in India was like being stuck in a maze with no exit signs. Promoters would shuffle between BIFR, DRT, and courtrooms-losing time, money, and eventually, value. For many, delay was the default strategy. But what got lost in the noise was hope. Hope that revival was even possible.
So why does a company really head into insolvency?
It’s rarely just “bad business.” It’s often a mix of delayed decision-making, mismatch between ambition and working capital, external shocks, or-in some cases-a simple refusal to pivot.
Now here’s where it gets personal:
Imagine being a second-gen entrepreneur watching your father’s legacy firm sink, not because the product wasn’t good, but because the paperwork wasn’t. Or because the promoter was emotionally attached but operationally absent. It happens. More often than you think.
What companies should ideally do before hitting the IBC button is introspect-realistically. Ask:
Because once you step into the world of IBC, it’s no longer just your story. It becomes a public process-with professionals, creditors, legal advisors, and often, a reluctant promoter all pulling in different directions.
And here lies the next big challenge: non-cooperation by promoters.
This alone can derail even the most well-intentioned resolution. The delays caused, the cost of litigation, and the emotional wear on employees-it compounds. The average CIRP process takes longer than the prescribed 330 days.
Why? Because information isn’t handed over, litigation floods in, and decision-making is stalled until there’s nothing left to revive.
But there’s a silver lining.
IBC, despite its complexities, brought a mindset shift: Value erosion is real, but so is value recovery-if approached right. If companies take pre-IBC planning seriously, empower professionals instead of resisting them, and treat resolution as rebirth, not punishment-there is still a future.