The law relating to Insolvency is not new in India; it owes its origin to English law. The earliest provisions relating to insolvency can be traced to sections 23 and 24 of the Government of India Act,1800. Before the enactment of the Insolvency and Bankruptcy Code, 2016, the provisions relating to insolvency were fragmented, and there was no single law dealing with insolvency and bankruptcy. The SARFAESI Act, 2002 and the Companies Act, 2013 dealt with insolvency and bankruptcy before the enactment of the 2016 Act.

The inadequate, insufficient and multiple overlapping laws prior to 2016 led to the enactment of the Insolvency and Bankruptcy Code, 2016, a comprehensive legislation by codifying the existing laws relating to insolvency and also including relevant reforms to promote the 'ease of doing business'.

The main object of this legislative enactment is to 'Resolve' and not to 'Liquidate', which directly impact the economic growth of the nation. Liquidating every corporate body for making a default in payment due to temporary cashflow uncertainty will adversely impact the economic growth rather the main motto is to resolve the issue between the creditors and the debtors and to make relevant arrangements for repayments.

The legislative intent make it clear that Liquidation is the last and final resort available if no amicable arrangement or settlement was agreed between the creditors and the debtors.

Digitalisation of the IBC

The modern world is highly influenced by technology, the exponential growth in digital technology in recent years had became a part of peoples day to day life. The Insolvency and Bankruptcy Code, 2016 was enacted aiming to streamline and expedite the process of insolvency resolution and debt recovery and in order to achieve one of the objects of the legislative framework i.e expedite procedures in resolution and debt recovery, the inclusion of digital technology in various processes within the IBC ecosystem is advisable.

The digitalisation of the IBC ecosystem will be helpful for initiatives like digital filing portals, AI driven analysis and online case management systems, all of which seeks to enhance transparency, efficiency and accessibility for stakeholders. However like any other systemic transformation, digitalisation of insolvency laws has its pros and cons, and it is critical to examin these pros and cons to create a balanced and effective infrastructure.

Pros of Digitalising the IBC

1. Enhanced Efficiency: One of the primary benefits of digitalising the IBC ecosystem is to enhance the efficiency and speed in the IBC process and procedure. By automating regular tasks, such as filing, document management, and case updates, digital systems reduce the reliance on manual intervention of natural persons and will lead to minimise delays. Automated workflows can streamline the previously time-consuming processes, helping to reduce the backlog of cases in the National Company Law Tribunal (NCLT). This improvement can lead to faster resolution times and allows creditors to recover debts more quickly, which in turn improves the overall business atmosphere in India.
    
2. Improved Transparency and Accountability: Digital platforms make case-related information, documents, and proceedings easily accessible, promoting greater transparency. All parties, including creditors, debtors and regulatory authorities like the Insolvency and Bankruptcy Board of India (IBBI), can access case updates and documentation in real time. This reduces information asymmetry and increases accountability among stakeholders, as the entire process is more visible and trackable. Such transparency strengthens the integrity of the system and can improve public and investor confidence in the insolvency process.
    
3. Remote Accessibility and Participation: Digitalisation enables remote access, allowing the parties to participate in proceedings without being physically present. This is particularly useful in cases where creditors, resolution professionals, or other stakeholders are spread across multiple locations. With online case portals, virtual hearings, and digital filings, the IBC framework can ensure broader participation and inclusivity, reducing geographical barriers and saving time and resources.
    
4. Data Driven Decision Making: Digitalising the IBC framework enables the collection and analysis of vast amounts of data on insolvency cases, creditor recoveries and asset valuations. Advanced analytics can support data-driven decision making, helping resolution professionals and stakeholders for a better understanding of the insolvency landscape and to predict trends. Access to historical data can also aid in the valuation of distressed assets, facilitating more accurate assessments and improving outcomes.
    
5. Cost Saving and Resource Optimization: Digital systems reduce reliance on paper documentation, physical storage, and administrative resources. By moving to a digital framework, the IBC process becomes less costly for both the judiciary and stakeholders, as tasks like data entry, filing and case management are automated. This cost efficiency is especially valuable in a resource-constrained environment, freeing up resources for more complex tasks.
    
6. Reduces Errors and Enhanced Accuracy: Digital systems can significantly reduce human errors in processes such as data entry, claim calculations, and distribution, leading to more accurate filings and fairer outcomes for creditors and debtors. Automated processes are more reliable for repetitive tasks, helping ensure accuracy in crucial areas like claim verification and asset valuation.

Cons of Digitalising the IBC

• Cybersecurity and Data Privacy Risks With digitalisation comes the challenge of cybersecurity. Sensitive data related to the financial health of companies, debt recovery proceedings, and personal information about stakeholders are stored online, making the system vulnerable to cyber attacks and data breaches. A breach could compromise the privacy and security of all parties involved, undermining trust in the IBC framework and potentially damaging India's financial ecosystem.
• Dependence on Technology and Operational Risks Increased reliance on digital systems creates a dependency that could be problematic if technical issues arise. System failures and cyber-attacks or technical glitches can disrupt proceedings, delay resolutions and may compromise the efficiency gained from digitalisation.
• Loss of Human Judgment and Flexibility While digital systems improve efficiency, they can lack the flexibility and judgment that human intervention offers. Insolvency cases often involve complex negotiations and subjective assessments that require discretion and application of human mind. Automation may struggle with these nuances, potentially leading to rigid outcomes in cases which need a more tailored approach.
• High Implementation and Maintenance Costs Building and maintaining a digital framework for IBC requires significant financial investment in terms of technology, infrastructure and training. This initial cost can be a barrier, especially considering the financial impediments in the judicial system.

Conclusion
The digitalisation of the IBC ecosystem offers a promising opportunity to modernise India's insolvency framework by enhancing efficiency, transparency and stakeholder engagement. Moreover, data analytics and automation can enable better decision making, helping resolution professionals and creditors achieve fair and timely outcomes.

However, this transition also demands caution. Security vulnerabilities, such as cyber attacks and data privacy risks, pose significant challenges that could undermine trust in the digital system. To ensure that digitalisation enhances the IBC ecosystem without creating new inequities, a robust support structure including cybersecurity measures, digital literacy programs, and accessible interfaces is essential.

Ultimately, a well balanced approach that integrates technology while respecting the need for application of human mind and discretion in complex cases will be key. Policymakers must carefully design a digital IBC infrastructure that leverages India's technological advancements while fostering a secure, inclusive, and adaptable insolvency framework.