Corporate Rescue in India: The Influence of the Courts

Journal of Corporate Law Studies, Vol. 1, 2015, Forthcoming

Oxford Legal Studies Research Paper 37/2014

44 Pages Posted: 16 Jul 2014  

Kristin van Zwieten

University of Oxford - Faculty of Law

Date Written: July 1, 2014

Abstract

India is poised for significant reform to its corporate insolvency laws, including the introduction of a new rescue procedure. The reforms follow two decades of sustained criticism of the law, critics complaining of lengthy delays and a range of related costs in the disposal of proceedings. This article focuses on the most notorious of India’s existing insolvency procedures, a corporate rescue procedure established under the Sick Industrial Companies (Special Provisions) Act 1985. On the eve of its repeal, the article presents the results of an investigation into how this Act operated over time, and why. Its central contribution is to report new evidence of the influence of the courts on the operation of the Act. The article reveals how key provisions of the Act were interpreted and reinterpreted by judges in attempts to rescue companies destined for liquidation, and to protect some of their stakeholders (especially employees) in the interim. The evidence of these innovations offers a new and compelling explanation for why the rescue procedure became slow and costly. Acknowledging and understanding the influence of the courts on the operation of this procedure may help to guard against India’s new corporate rescue procedure suffering a similar fate.

Keywords: Corporate insolvency law, Corporate rescue, India, Law and finance, Law and development

JEL Classification: G33, K22

Suggested Citation

van Zwieten, Kristin, Corporate Rescue in India: The Influence of the Courts (July 1, 2014). Journal of Corporate Law Studies, Vol. 1, 2015, Forthcoming ; Oxford Legal Studies Research Paper 37/2014. Available at SSRN: https://ssrn.com/abstract=2466329

Kristin Van Zwieten (Contact Author)

University of Oxford - Faculty of Law ( email )

St Cross Building
St Cross Road
Oxford, OX1 3UL
United Kingdom

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