Corporate Governance Under Stress: An Analysis of Insolvency Proceedings in India

Chhaya Chaudhary, Dr. Neha Susan Varghese

Abstract: Corporate governance plays a pivotal role in ensuring transparency, accountability, and ethical conduct within corporate entities. However, situations of financial distress and insolvency often place significant strain on established governance frameworks, exposing structural weaknesses and managerial inefficiencies. This study, titled ?Corporate Governance under Stress: An Analysis of Insolvency Proceedings in India,? critically examines the interplay between corporate governance mechanisms and insolvency resolution processes under the Insolvency and Bankruptcy Code, 2016 (IBC). The research explores how insolvency proceedings alter traditional governance structures by shifting control from the board of directors to insolvency professionals and creditor committees. It analyses the effectiveness of this transition in preserving the interests of stakeholders, particularly creditors, minority shareholders, and employees. The study also evaluates the role of key institutions such as the Insolvency and Bankruptcy Board of India (IBBI), National Company Law Tribunal (NCLT), and resolution professionals in maintaining governance standards during the Corporate Insolvency Resolution Process (CIRP). Further, the paper identifies recurring challenges, including delays in resolution, information asymmetry, lack of accountability among resolution applicants, and potential misuse of legal provisions. Through doctrinal and analytical methods, supported by select case studies, the research highlights how governance lapses before insolvency often exacerbate financial distress, thereby complicating the resolution process. The study also assesses whether the IBC framework adequately balances the objectives of value maximization, timely resolution, and equitable treatment of stakeholders while upholding principles of good governance. It argues that although the IBC has significantly improved creditor rights and streamlined insolvency procedures, gaps remain in ensuring transparency, ethical conduct, and long-term corporate discipline. In conclusion, the paper suggests reforms aimed at strengthening corporate governance during insolvency, including enhanced regulatory oversight, stricter compliance requirements, improved capacity of adjudicating authorities, and greater emphasis on accountability mechanisms. The findings contribute to the broader discourse on corporate governance reform in emerging economies and underscore the need for a resilient insolvency framework that can withstand periods of financial stress while safeguarding stakeholder interests.

Keywords: Corporate Governance, Insolvency and Bankruptcy Code, Insolvency and Bankruptcy Board of India (IBBI), Resolution Professionals, Corporate Failure

How to Cite?: Chhaya Chaudhary, Dr. Neha Susan Varghese, "Corporate Governance Under Stress: An Analysis of Insolvency Proceedings in India", Volume 15 Issue 4, April 2026, International Journal of Science and Research (IJSR), Pages: 575-578, https://www.ijsr.net/getabstract.php?paperid=SR26408192341, DOI: https://dx.dx.doi.org/10.21275/SR26408192341

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