Bring an SOP for cross-border insolvency, according to an economic study

NEW DELHI: As part of insolvency reforms, the Economic Survey 2021-22 suggested several steps to simplify voluntary liquidation to improve “ease of exit”, while recommending a standardized framework for insolvency cross-border which is currently lacking.
One of the reasons for the delay in insolvency proceedings, the investigation pointed out, is “delays in obtaining No Objection Certificates (NoCs) from departments, including the Central Board of Direct Taxes, the Central Excise and Customs Board, Employees Provident Fund Organization and other regulatory sectors”.
Since there are no well-defined standard operating procedures (SOPs) in the departments for granting NoCs, this often leads to delays. The “reluctance of banks to close existing bank accounts” and also to open the new liquidation bank account by the liquidator is another reason.
“To sum up, there is a need to simplify the problems of the voluntary liquidation process, improve the ease of exit of companies,” said the Economic Survey and argued for a one-stop-shop system for the whole process. “A portal that combines all stages of the liquidation process, from application by companies to processing by all departments, will prove very useful,” he said.
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