The Indian government and the Insolvency Bankruptcy Board of India (IBBI) have been making continuous efforts to expedite insolvency resolution and liquidation procedures. The IBBI recently released discussion papers to improve the Corporate Insolvency Resolution Process (CIRP) efficiency and simplify liquidation. However, the issue of high case numbers, complex procedures, and the requirement of numerous documents still needs to be addressed. Recently, the president of the National Company Law Tribunal (NCLT) suggested the adoption of artificial intelligence (AI) Insolvency technology as a crucial step to accelerate early insolvency resolution. AI, such as collaborative cloud space, can enable the timely implementation of insolvency laws by an expert insolvency professional more easily and precisely.
THE DISADVANTAGES OF MANUAL DOCUMENTATION
The following highlights a few issues with manual documentation that could be avoided by using Insolvency technology.
Paper documents require making multiple copies, leading to confusion and versioning issues while working with an insolvency professional.
Working with paper makes it more difficult to share, is at risk of misplacement and slows down workflow thus decreasing productivity.
Paper production negatively impacts the environment by contributing to a significantly larger carbon footprint.
BENEFITS OF AUTOMATED COLLABORATIVE SPACES
The following are a few ways by which Insolvency Technology helps users.
1. Automated processes: Traditional legal tasks that are performed automatically through legal software improve operational speeds and can allow an insolvency professional to focus on other essential tasks.
2. Ease of research: Legal research solutions provide professionals access to updated regulations and a wide range of effective tools and functionalities, thus reducing dependency on print products and saving time.
3. Better resource management: Technical management, such as title management and calendaring applications, enables professionals to utilise resources effectively and thus improves outcomes.
4. Reduced risk of errors: Technology reduces the risk of mistakes by facilitating easy access to documents and digital data, and utilising analytics for better processing and interpretation of facts and evidence.
5. Increased transparency: Insolvency technology management platforms generally create a transparent marketplace where clients can connect with trustworthy professionals, chat in real time, and learn about legal requirements.
THE FUTURE OF INSOLVENCY TECHNOLOGY
Pre-insolvency, or predicting a company’s insolvency in advance, helps investors minimise risks. AI has transformed this process by quickly and efficiently analysing large amounts of data using a variety of techniques.
ii. Corporate Insolvency Resolution Process:
The Corporate Insolvency Resolution Process is also known as the CIRP. It is initiated under the Insolvency and Bankruptcy Code (IBC) when corporate debtors default. It involves filing applications, implementing a moratorium, appointing a Resolution Professional (RP), and forming a Committee of Creditors (CoC).
- AI integration in the CIRP reduces time consumption and efficiently handles Big Data.
- AI algorithms evaluate Key Performance Indicators to make quick and informed decisions, identifying links between performance measures and insolvency risk.
- AI expedites case progression, aids in file discovery searches and document recognition, and reduces the time between filing and the start of the CIRP, enhancing efficiency and reducing costs.
Liquidation is a critical goal of the Insolvency and Bankruptcy Code (IBC), but it often faces delays in maximising asset value. AI expedites and enhances the efficiency of the liquidation process, especially at e-auctions, overcoming challenges like designated auction portals and time intervals.
In conclusion, the Indian government and the Insolvency Bankruptcy Board of India (IBBI) have taken steps to expedite insolvency resolution and liquidation procedures. However, challenges such as the presence of a high number of cases, complex procedures, and the requirement of numerous documents still persist. Adopting artificial intelligence (AI) Insolvency technology can address these challenges by promptly implementing insolvency laws. Automated collaborative spaces and legal tech solutions offer benefits such as automated processes, ease of research, better collaboration among lawyers, and faster information processing. These advancements can improve the efficiency and effectiveness of insolvency resolution processes, which can benefit the practitioner’s clients greatly.