The Ministry of Corporate Affairs and IBBI are considering a bankruptcy early-warning system for companies. The system aims to detect financial stress before payment defaults and prevent insolvency cases. The proposal follows a Supreme Court suggestion and seeks to ease the load on NCLTs.

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• Early-warning framework under discussion, part of IBC reform
• Goal: spot distress signals before default, prevent insolvency
• Inspired by Supreme Court suggestion in a bankruptcy case
• Could use financial ratios, sector red flags, project delays
• Directors, auditors may face duty to report distress signs
• Pre-insolvency mediation and restructuring platforms proposed
• Over 1,194 firms resolved under IBC since 2016, ₹3.89 trillion recovered
• Many cases exceed 330-day legal timeline for resolution
• Legal changes may involve Companies Act, IBC, SEBI, RBI, RERA
• Aim: shift from reactive crisis-fighting to preventive system