Restructuring and Insolvency

On 5 March 2020, the Reserve Bank of India (RBI) imposed a moratorium on Yes Bank following unsuccessful attempts to raise additional capital to cover provisions for non-performing assets and a deterioration of its financial position. This was against the backdrop of the downgrading of Yes Bank’s credit rating and concerns over its corporate governance. The RBI has taken over Yes Bank’s board and imposed limits on withdrawals to protect the interests of depositors until 3 April 2020.

The Indian Insolvency & Bankruptcy Code, 2016 (IBC) has seen several challenges in recent times. The Indian Government has been proactive in responding to these. In response to the recent set of challenges, the Government intends to implement another round of amendments to the IBC. The key takeaways from this proposed amendment are discussed below. Although the draft text may change, the first impressions of the bill are positive, and an effort has been made to address a number of difficult issues that various stakeholders have been dealing with in the recent past.

Over the last 12 months, the market has witnessed myriad developments in relation to the insolvency and Bankruptcy Code 2016 ("IBC"), the deterioration of the financial services sector in India and the compression of credit from traditional banking sources and continued high levels of interest in distressed investments in India by International investors.