₹4.38 Lakh Crore Stuck: MCA Eyes New Funding Route for Insolvency Recoveries
What Happened
The Ministry of Corporate Affairs (MCA) said it will examine third-party litigation funding for insolvency cases involving PUFE transactions (Preferential, Undervalued, Fraudulent and Extortionate transactions). The move aims to improve recoveries in cases where large sums are tied up in legal disputes.
Key Takeaways
More than ₹4.38 lakh crore remains locked in 1,878 avoidance proceedings under the insolvency framework. Litigation funding could allow outside investors to finance legal actions, helping creditors pursue claims and recover funds without bearing the full cost of lengthy court battles.