Mumbai: The government is in the process of drafting laws that would provide an efficient means for corporate rehabilitation and liquidation, corporate affairs minister Prem Chand Gupta said.

There is need for an effective system and framework for restructuring, rehabilitation or winding up of companies, the minister said

"The new Company Law being framed by the government will provide a framework for efficient turnaround as well as quick liquidation process and help realise the best value for stakeholders and lenders," Gupta said at the inauguration of a training programme on insolvency and restructuring organised by the Institute of Company Secretaries of India and INSOL International.

He said a company is passing through a phase wherein it is unable to utilise its assets efficiently or manage its operations properly, must necessary have to take early remedial measures to stem the tide. This becomes all the more important when a company had been closed down and all assets are lying unused, Gupta added.

India does not have an insolvency law like in the West and the regulatory regime dealing with corporate insolvency is contained in the Companies Act and Sick Industrial Companies (Special Provisions) Act.

The system of referring sick companies to the Board of Industrial and Financial reconstruction (BIFR) has proved time-consuming and inefficient, he pointed out.

A World Bank study has pointed out that the time taken to wind up a business in India is over 10 years, while the same is 2-3 years in other parts of the world. The recovery is also low, about 13 per cent against 50-60 per cent elsewhere.

Currently assets and economic resources worth thousands of crores are locked in the liquidation process of about 6,200 companies across the country.