India has emerged as one of the strongest economies in the past three decades. The overall growth has been outstanding. The Micro, Small and Medium sector or MSME is amongst the top contributors in the economic development.
However, it is also a truth that the increased number of NPA (Nonperforming Assets) in the sector is quite high.
It is a reason to worry because it causes harm to not only the balance sheet of the finance company or lender, but also a negative thing to the economy.
To overcome the situation and to make the laws stringent, a comprehensive insolvency and bankruptcy code has been formulated by the government.
The code aims at giving powers to the creditor when the debtor does a default. At the same time, it ensures that the business is saved during the debt settlement process.
Thus, the lender doesn’t end up with a loss, and the business is also not compromised.
The code gives provisions for reciprocal and bilateral arrangements
When a case gets escalated to the company law tribunal, it follows a time-bound and systematic procedure for insolvency resolution and liquidation.
Thus, there is a significant improvement in the debt recovery rate and the revival of industries.
When a bankruptcy lawyer takes the case of a business that has become NPA, he studies it in light of the new code.
The insolvency professional deals with the commercial aspects such as:
- Management of the corporate debtor affairs
- Facilitation in the formation of creditors committee
- Organization of the necessary meetings and so on.
A resolution plan is prepared so that the burden on the judiciary process is reduced. Thus, the delay is avoided.
When the default happens, the control moves to the creditor. There are strict guidelines to complete the things in a time-bound manner.
Experts say that when the case is resolved in a finite timeframe, the chances of saving the business from liquidation increase.
The efforts are made to save the business
Whether it is an NPA consultant or lawyer, everyone works towards protecting the company from liquidation. Enough time is given to resolve the problems.
When the NPA consultant takes the control, he proposes different options based on the specific scenario.
It depends on the decision of the business owner, which path to be followed. The rules and regulations, laws and provisions are balanced and unbiased.
By choosing the right path and strategy, the business can come out from the troublesome situation.