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At CE Interim, we help global investors, boards, and business owners navigate urgent transformation scenarios across borders. As part of the Valtus Alliance, we tap into deep local restructuring expertise to ensure every recovery journey is grounded, fast, and compliant.

India is one of the world’s most dynamic but complex markets when it comes to corporate recovery. In this interview, Cecilia Brinck, Managing Partner at Nordic Interim SE – A Valtus Company, speaks with Sanjay Lakhotia, CEO and co-founder of Noble House Consulting in India.

Together, they explore the evolution of India’s restructuring landscape and how the Insolvency and Bankruptcy Code (IBC) transformed the game for both domestic and cross-border operators.

What makes India’s restructuring and turnaround framework unique?

India’s defining shift came in 2016 with the launch of the Insolvency and Bankruptcy Code (IBC). This landmark reform unified several outdated laws into one time-bound resolution process.

Its most radical innovation? A creditor control model that gives decision-making power to financial creditors rather than defaulting promoters.

The system introduced unprecedented levels of discipline, accountability, and transparency. It’s still maturing, but the pace of progress is exceptional, especially in a country with India’s scale and diversity.

Are there mandatory reports during the Corporate Insolvency Resolution Process (CIRP)?

Yes. Once a company is admitted under IBC, an Interim Resolution Professional (IRP) is appointed. They are responsible for detailed diagnostics covering financials, operations, liabilities, and assets.

The reports serve as the basis for decision-making by the Committee of Creditors (CoC).

Registered valuers, independent audits, and third-party assessments add rigor. The result is a formal, structured approach to insolvency, replacing decades of opacity.

What’s the most common mistake companies make in early distress?

Denial. Many leadership teams delay the hard conversations — hoping that a funding round or large order will fix the cash crunch. By the time help is sought, lender trust has eroded and options are limited.

Another mistake is relying solely on internal teams. In turnaround situations, fresh external leadership is often the difference between drifting and decisive execution.

That mindset is shifting. With tools like IBC and Pre-Packaged Insolvency (PPIRP), Indian promoters are becoming more proactive and less ashamed to use restructuring as a strategic reset, not just a last resort.

When should a restructuring expert be brought in — and who mandates it?

The best moment is before default, when stress becomes persistent. Appointing an interim CFO or CRO early protects value and expands the available options.

In most cases, the board or promoters initiate the hire. Increasingly, banks and investors also recommend specialists from trusted interim or advisory panels. India’s professional pool has grown significantly in recent years, offering sector-specific expertise that can act fast and credibly.

Does India offer protective frameworks similar to Europe?

While India doesn’t use the term “protective shield,” it has equivalents. The Pre-Packaged Insolvency Resolution Process (PPIRP) is built for MSMEs needing quick and consensual restructuring.

It provides a moratorium, allows promoter-led plans, and includes oversight by creditors.

There’s also Section 230 of the Companies Act, which enables court-approved schemes of compromise or arrangement, often used in voluntary restructuring cases.

India’s legal direction is clear: rescue viable businesses rather than simply liquidate them.

What happens to employee salaries and benefits during insolvency?

Under the IBC, wages during the process are treated as Insolvency Resolution Process Costs (IRPC) and get top repayment priority.

While backpay before the CIRP may be at risk, the growing trend is to factor employee retention into resolution plans. Culturally, there’s a shift happening — people are increasingly seen not just as cost, but as part of the company’s recovery engine.

How do interim executives protect their fees during insolvency?

If the interim leader is appointed formally (as IRP or in a court-approved role), their fees are included in IRPC and approved by the CoC.

In informal or pre-IBC engagements, clear contracts, milestone-based fees, and upfront components are essential. Escrow-backed agreements are also gaining popularity in high-risk turnarounds.

What should foreign companies with Indian subsidiaries do in severe crisis?

Act fast. Start with a neutral, external diagnosis. Is the issue local, or global in origin? If the Indian entity holds standalone value, appointing a local interim executive who understands compliance, regulation, and cultural nuance can speed things up dramatically.

Too often, foreign headquarters delay decisions out of legal uncertainty. But India now has clear insolvency pathways, including cross-border mechanisms in development. Voluntary restructuring is nearly always better than waiting for courts to step in.

How active is private equity in India’s restructuring market?

Still emerging, but growing fast. Players like Edelweiss ARC, Piramal, and Oaktree are now aggressive in the distressed asset space. Family offices and special situations funds are also circling high-potential turnarounds.

That said, public sector banks still dominate large restructurings and are typically cautious. Over time, PE-led restructuring will likely increase — especially in consumer, infrastructure, and tech, where asset strength remains but management needs change.

Does the Indian government support restructuring?

Yes, particularly for MSMEs. During COVID, India rolled out the Emergency Credit Line Guarantee Scheme (ECLGS), disbursing over ₹3 trillion in relief. Other sector-specific schemes like TUFS (textiles) and PLI (manufacturing) continue to support reinvestment.

While India does not yet offer large-scale wage or turnaround subsidies, the direction is positive. The creation of NARCL (India’s bad bank) marks another step toward long-term ecosystem maturity.

Final Thought from Sanjay Lakhotia

“Restructuring in India is no longer a backroom fix. It’s a board-level decision, shaped by new laws, investor expectations, and global standards. The earlier you act, the better the outcome.”

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