IBC Gaps Exposed After Supreme Court Rejects JSW-Bhushan Deal
Why in the news
The Supreme Court struck down JSW Steel’s takeover of Bhushan Power and Steel, reviving debate on weaknesses in the Insolvency and Bankruptcy Code (IBC).
Concerns
- Delays clash with the IBC’s goal of time-bound recovery.
- Limited capacity in institutions; poor creditor-debtor information flow.
- Debtors use strategic litigation to stall.
- Creditor-dominant control encourages debtors to obstruct.
Way forward
- Balance outcomes for both sides; let debtors retain operational control post-resolution to lower resistance.
- Raise the deterrence value of insolvency, using the threat of losing control to hasten deals.
- Encourage pre-insolvency arbitration and out-of-court talks.
- Prevent moral hazard and fix system design rather than individual cases.
Exam angle
- Case: JSW Steel – Bhushan Power and Steel.