ROLE OF MEDIATION IN THE INSOLVENCY PROCESS

Abstract

The insolvency process in India, primarily governed by the Insolvency and Bankruptcy Code, 2016 (IBC), has significantly transformed the resolution landscape for distressed entities. However, the formal litigation-driven structure of the IBC often results in delays, adversarial proceedings, and value erosion of assets. In this context, mediation emerges as a constructive alternative dispute resolution (ADR) mechanism that promotes efficiency, preserves commercial relationships, and reduces the burden on insolvency courts. This paper explores the evolving role of mediation within the insolvency regime in India, emphasizing its compatibility with the objectives of the IBC — timely resolution, value maximization, and balancing stakeholder interests. The study examines relevant legal provisions, judicial interpretations, and comparative insights from jurisdictions like the UK and Singapore, where mediation is effectively integrated into insolvency proceedings. It also highlights recent developments such as the proposal of pre-packaged insolvency schemes and the institutional push toward incorporating ADR into insolvency resolution processes. While mediation is yet to be formally embedded in the IBC framework, this research argues for its strategic inclusion to foster a more collaborative and expedited resolution environment.