Is India ‘B-ready’ in insolvency?

The World Bank recently launched the first phase of its Business Ready (‘B-ready’) report ranking the business environment of countries across ten areas — entry, location, utility services, labour, financial services, international trade, taxation, dispute resolution, market competition, and business insolvency. The report has fresh inclusions and assessment methodology built around thematic pillars (regulatory quality, public services, and operational efficiency). In the first phase, 50 countries have been covered, with expansion gradually. The report replaces the Doing Business (DB) series, discontinued in 2021.

India has not been included in B-ready yet, but is planned in future phases. India’s upward movement in the DB rankings from 130 (2016) to 63 (2020) was attributed to many reforms including the Insolvency and Bankruptcy Code’s (IBC’s) successful introduction and its resolution focus.

However, considering the freshly constituted index, it is worth examining whether India is B-ready in insolvency and key focus areas for a reasonable position.

Revised perspectives

In insolvency, the erstwhile DB report assessed nations annually on 16 indicators (across four categories comprising commencement procedures, value protection, reorganisation proceedings, and creditor participation). It assessed regulatory quality as well as recovery rates (discounted for time and cost). The report’s aggregate score reflected a simple average of the two components (for 190 countries).

In contrast, the revised B-Ready is more broad-based, relying on 49 indicators for insolvency (across three pillars: regulatory quality [28 indicators]; institutional infrastructure [17]; and time /cost efficiency [4]). Each of these pillars (equal one-third weight) in turn comprises several categories /subcategories.

While several DB insolvency indicators also find place in the B-Ready (for instance, commencement, IP appointment/dismissal, interim finance, avoidance transactions), the revised methodology significantly expands the scope of what constitutes sound insolvency regimes to include pre- and post-commencement indicators (for instance, workouts/out-of-court mechanism, management obligations, automatic stay, environmental and labour claims, specialised regime for MSMEs and cross-border insolvency). The index departs from DB report’s primary focus on regulatory quality (and recoveries), while also emphasising institutional infrastructure (digital/e-services), and efficiency. Its emphasis on value protection resonates well with IBC’s objectives.

Importantly, the integration of specialised regimes marks the recognition of the criticality of cross-border laws to sound insolvency systems (which UNCITRAL has stressed since 1997 through its harmonised model law). However, B-ready does not insist on its adoption, but assesses adequate mechanisms for recognition of foreign proceedings and international cooperation. Therefore, even non-signatory countries have scored optimally in this category (example: Vietnam).

IBC’s likely position

While India’s positioning in the erstwhile DB series post IBC was praised, considering B-ready, India would need to take some calibrated steps. A criteria review reveals some aspects (not exhaustive) for deliberation:

First, in terms of regulatory quality, IBC has enabling guidelines across several B-ready indicators (example: commencement, value protection, creditor participation, IP appointment /dismissal, interim finance, and specialised procedures /pre-packs for MSMEs). However, IBC lacks some. For instance, it has limited provisions (bilateral /case-to-case cooperation) in cross-border insolvency.

The adoption of UNCITRAL (United Nations Commission on International Trade Law) model law remains long pending.

Other issues include a lack of priority for environmental claims in the IBC waterfall, an aspect requiring deliberation. Strengthening hybrid mechanisms/workouts for debtors (beyond MSMEs) have also been in the works for some time now.

Next, in the context of institutional infrastructure (digital services, interoperability, public information, IP registry, and expertise of courts/public officials), there have been many positive initiatives (some in place, others work in progress).

For instance, India recently mandated the use of the centralised e-auction portal (eBKRAY) for IBC, and work is ongoing to implement an integrated technology platform for IBC (announced in Budget 2024-25). Other ongoing initiatives to augment IBC infrastructure include strengthening NCLT benches. As regards information sharing, the regulator routinely publishes relevant data on timelines/public officials/IPs.

Lastly, in efficiency, significant delays continue to plague IBC (597 days in reorganisation /508 days for liquidation). Hence, this remains a core issue, endeavoured to be addressed through periodic amendments/guidelines. However, strengthening B-ready pillars may themselves lead to improved efficiency.

However, several subtle nuances within B-ready indicators exist, which may prevent optimal scoring (even where IBC prima facie appears positive). For instance, while IBC enables interim finance, financiers get takeout priority over all creditors (not just unsecured), historically viewed as sub-optimal for credit markets from World Bank lens. Similarly, while IBC has an automatic stay, secured creditors cannot opt out before liquidation order (even if erosion in security value). Hence, such nuances will need careful consideration for a strategy.

Some implications

The B-ready (with its imperfections) brings some fresh dimensions for assessing insolvency regimes with implications for direction of India’s insolvency reforms. The index sets standards of what constitutes sound regimes. However, given each pillar has equal weightage, focusing only on the regulatory framework while not improving operational infrastructure and efficiency will hinder a high score for IBC. While India has already initiated several B-ready steps, much will depend on timely implementation of various planned/ongoing initiatives (such as integrated technology platforms, code timelines, cross-border frameworks, environmental claims priority and creditor-driven workouts) while tackling nuances in scoring criteria. However, ticking checkboxes may not be considered the sole objective of any economic reform (B-ready also notes a need to avoid overhype surrounding economy-wise rankings). Further, assessment hinges on specific index variables selected, and scholars have long argued, there is no one-size-fits-all approach.

Hence, notwithstanding changed benchmarks and scoring nuances, while specific B-ready indicators may be prioritised for reforms/refinements, equivalent focus must be maintained on improving IBC’s effectiveness for achieving the key objectives of any insolvency law (efficiently reorganising viable and liquidating unviable entities). While IBC already possesses some B-ready indicators (interim finance, pre-packs, debtor initiations, etc), challenges persist in their effectiveness/uptake. Hence, while India is making the right noises for B-ready, focus on removing bottlenecks must remain (while also providing regulatory clarity on dynamic jurisprudence). Further beyond B-ready, a domestic index to gauge IBC’s on-ground effectiveness can be explored at an appropriate point, factoring in local specificities.

The writer is presently a Visiting Fellow at the Research & Information System for Developing Countries (New Delhi). Views are personal

Published on August 1, 2025

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