An expert committee, led by former Law Secretary TK Viswanathan, appointed by IBBI (Insolvency and Bankruptcy Board of India), recommends voluntary mediation under the Insolvency and Bankruptcy Code (IBC).

  • Mediation involves a neutral third party helping resolve disputes between parties.

Key Recommendations of the TK Viswanathan Committee:

About Insolvency and Bankruptcy Code (IBC):

• In 2016, at a time when India’s Non-Performing Assets and debt defaults were piling up, the Insolvency and Bankruptcy Code (IBC) code was introduced.

• It aims to promote entrepreneurship, protect the interests of creditors, and ensure timely resolution of distressed assets.

• One of IBC’s core principles is the time-bound resolution process to avoid delays and maximize asset value.

  • Under the Insolvency and Bankruptcy Code (IBC), companies must complete the entire insolvency process within 180 days, with the option for an extension if creditors don’t object. Smaller companies, including startups with an annual turnover of Rs 1 crore, have a shorter timeframe of 90 days for completing the insolvency exercise.

Voluntary Mediation Framework:

  • Currently, IBC doesn’t have a legislative mandate for mediation.
  • The committee suggests a voluntary mediation framework under IBC, aligning with the Mediation Act, of 2023.

Balancing Objectives:

  • The committee aims to balance IBC’s objectives of “time-bound reorganization” and “maximization of value.”
  • Encourages autonomy for parties to choose ‘out-of-court’ mediation voluntarily.

Stage-Based Introduction:

  • Recommends a phased introduction of voluntary mediation, preserving existing insolvency resolution process timelines.
  • Ensures independence and flexibility in the framework for quick implementation learning.

Independence and Flexibility:

  • Emphasizes ‘independence and flexibility’ for efficient mediation implementation.

Blueprint for Code:

  • Independent infrastructure to meet Code objectives without compromising timelines and public rights.

Importance of Voluntary Mediation under IBC:

  • Enhanced Efficiency: Voluntary mediation provides an additional avenue for resolving disputes outside which will lead to quicker resolutions, reducing the burden on the formal legal proceedings.
  • Autonomy to Parties: Offers parties autonomy in choosing ‘out-of-court’ mediation. It recognizes the importance of empowering stakeholders to decide on dispute resolution methods.
  • Conflict Mitigation: Encourages collaborative problem-solving, fostering a more amicable resolution environment.
  • Specialized Insolvency Mediation Cell: Independent secretariat manages and administers insolvency mediations, adding efficiency.
  • Adaptation to Global Practices: Positions the IBC in line with international standards, attracting confidence from global investors.
  • Phased Introduction: Allows stakeholders to adapt and learn from the process, minimizing disruptions.


  • Enforceability Concerns: The enforceability of mediated settlements may be a concern, as parties might question the legal standing of agreements reached through mediation.
  • Exclusion of Financial Creditors: The exclusion of financial creditors from the initial scope of voluntary mediation provisions raises concerns about comprehensive representation in the process.
  • Dilution of Code Objectives: Some stakeholders may fear that voluntary mediation could dilute the fundamental objectives of the Insolvency and Bankruptcy Code, such as time-bound resolution.

Way Forward:

  • Introduce a provision within the IBC explicitly recognizing and enforcing mediated settlements, providing legal validity to agreements reached through mediation. This can enhance confidence in the process.
  • Engage all key stakeholders including financial creditors to establish a more inclusive framework.

The proposed recommendations focus on establishing a parallel and voluntary process alongside insolvency proceedings, aiming to enhance the overall efficiency and flexibility of dispute resolution mechanisms under the IBC.

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