IBC is here to stay, says Ashish Chhawchharia of Grant Thornton Bharat

In an interview with ET Now, Ashish Chhawchharia of Grant Thornton Bharat talks about the Jet Airways resolution and the unfair criticism the process garnered. Edited excerpts:
You're a direct stakeholder in the Jet Airways resolution, you got your hands dirty and managed to bring something like that to resolution; in the middle of a global pandemic, no less. What are the pitfalls and challenges in your view? Is the criticism fair?
I certainly don't think this criticism is fair. I may sound a bit biased because I am in this line of work, but look at how the NCLT has stood behind this and that is how regulators have kept their ears to the ground, they have changed and amended the regulations and laws as we move along. I think I will quote Dr Sahoo here, the success of the IBC is not to be seen from recoveries. I completely endorse what Rajnish Kumar said, the success of IBC has to be seen from what happened before it. There are thousands of cases which have been filed, creditors are empowered now with so much more than what they had before. Also, don't look at it as a recovery and haircut, these terms are not how the IBC was first amalgamated. If you look at the BLRC report, this is a resolution mechanism, it is shifting the economic resources from debtors to be able to run it with more solid hands and the idea is to continue with employment, generate better returns from the same investment so that itn't a liquidation process.

India is one of the few countries which has this two step process, the first expectation is revival of the company, and if that isn't the case then bankers are only looking at what is recoverable. That would mean complete destruction of valued assets, created on the ground, so I certainly feel that criticism is unfair.

I cannot comment on Harsh [Goenka]'s tweet, but you know I'm sure there are stories out there, there are cases out there. Look at how strongly the government has stood behind 29A, the change of management is so important in all of this so I do not think it merits the criticism that it is getting now.

We're in the middle of a pandemic, the second wave has receded, we do not know if a third wave will come but it is clear that there has been huge destruction of businesses and wealth because lockdowns and other factors. Do you see the impact of this overwhelming the IBC process in the future?
Well, the impact of the pandemic will certainly be felt on business and commerce; it cannot be undermined. We are seeing what they call a K-shaped economy, some of the strong companies recovering better and getting stronger and the smaller companies sort of sliding down the scale. There's a huge amount of consolidation that can be expected. I don't think that this is going to undermine the IBC process as such, because wherever there is capitalism there has to be a mechanism for insolvency or bankruptcy. Businesses are created by capitalist enterprises and there will be more. The way the IBC has been envisaged, I'm sure there is a lot of criticism about the timelines and recoveries. But, as we mature the law matures too; let us remember it is only five years old, we will see much better outcomes I believe. I say even better because I think the last five years have been very good if you compare it to the regime before.

IBC is not going anywhere, it is here and it is going to give businessmen a new opportunity like Rajnish Kumar said, the limited liability concept has to be there. Only then will entrepreneurs invest and risk their capital.