IBC ReformFirst-personDelhi HC Verdict

IBC: A Debt Trap for Entrepreneurs — My Personal Ordeal and a Call for Reform

By Kunwer Sachdev · Founder of Su-Kam · Petitioner in Kunwer Sachdev vs. IDBI Bank & Ors.
After dedicating three decades to building Su-Kam Power Systems Ltd, I personally walked through the wreckage of India’s Insolvency and Bankruptcy Code — not as a commentator, as the entrepreneur on the other side of the table. The IBC was sold to us as a framework that would balance the interests of investors and borrowers. In practice, it has become a system that devastates entrepreneurs while doing very little for genuine recovery. This is what I have seen with my own eyes.

⚖What the Delhi High Court’s Judgment in My Case Just Exposed

The recent Delhi High Court verdict in Kunwer Sachdev vs. IDBI Bank and Ors. is, in my view, a turning point. The court did not flinch from naming what every entrepreneur who has gone through this process already knows: the Committee of Creditors operates without a code of conduct, and the entire IBC machinery quietly tolerates it.

The judgment crystallised three things I had been saying for years:

  • There are no clear guidelines for the COC. The body that effectively decides whether a company lives or dies has no enforceable rules governing how it behaves. That vacuum is where arbitrary action and zero accountability live.
  • Company value erodes inside CIRP itself. The court recognised what insiders have known forever — the process designed to preserve value often destroys it, through COC action or inaction.
  • The IBBI must now formulate a code of conduct for COCs. The court directed it. This is the first time the regulator has been told, in writing, to bring transparency and accountability into a process that has had neither.

Read the full coverage of the judgment →

📊The Valuation Paradox I Watched Drain My Company

One of the cruelest design flaws in the IBC is the valuation process. The code mandates two valuations — fair value and liquidation value — at the very start of insolvency. I watched those valuations get done. I also watched them become completely irrelevant to what happened next.

The company is eventually sold or liquidated based on entirely different factors. The valuations end up as an expensive, time-consuming formality that drains money from a company that needs every rupee to survive. The original intent was sound: prevent the COC from eroding the asset, and give the entrepreneur a fair exit number. The code, as written, operationalises neither.

What an honest valuation should do: set the recoverable debt, halt interest accrual the day insolvency begins, and anchor every downstream action — forensic audit, fraud probe, defaulter declaration — to a fixed, defensible number. None of that happens today.

💔The Human Cost I Have Seen With My Own Eyes

Without a valuation-based benchmark, the entrepreneur ends up carrying the full weight of the debt — regardless of what the company is actually worth. Add to that the aggressive tactics creditors routinely use, and you have a recipe for mental collapse. I am not speaking from a study. I have lived it. And I know entrepreneurs who did not survive it.

When you strip a person of his company, his dignity, his standing — and then keep adding interest on a debt the company can never repay — you are not running a bankruptcy code. You are running a slow execution.

“The IBC must evolve to prioritise the entrepreneur’s dignity and the sanctity of human life over mere financial considerations.”

🔨What a Real Overhaul Looks Like — My Demand

The IBC, as it stands today, is not a recovery mechanism. It is a tool of oppression for the entrepreneur and a slow drain on the lenders too. If we are serious about salvaging its original purpose, here is what has to change:

  • Make valuation binding. Fair value and liquidation value must determine the ceiling of recoverable debt, not sit in a file as decoration.
  • Stop the interest clock the day CIRP begins. Continuing to compound interest on an admitted-stressed asset is mathematically dishonest.
  • Bind forensic audits, fraud probes, and defaulter declarations to the valuation. No more open-ended harassment.
  • Enforce a COC code of conduct — with teeth. The court has now directed IBBI to draft it. It must be enforceable, not advisory.
  • Give the entrepreneur a real chance at redemption. A dignified exit is not a favour; it is the cornerstone of any honest bankruptcy regime.

💭Why I Am Speaking About This Publicly

I am speaking because the cost of staying silent has been paid by too many entrepreneurs already. I built Su-Kam for thirty years. I watched the IBC dismantle it in ways that had little to do with the company’s actual condition and everything to do with how the process is structured. If my judgment, my hearing, and my voice can push the system one inch closer to fairness, then this article has done its job.

To every entrepreneur reading this: the IBC will not be reformed by lenders or by the COC. It will be reformed because entrepreneurs spoke up — in court, in the press, and on record. The Delhi HC has given us an opening. Let’s not waste it.
Disclaimer: Mr. Kunwer Sachdev, the original founder and visionary behind Su-Kam, is no longer associated with Su-Kam Power Systems Ltd. in any capacity. He has not been involved in the management, operations, or decision-making of the company for several years. Any products, services, communications, or representations made under the Su-Kam name have no connection to Mr. Kunwer Sachdev. His current efforts are entirely focused on new ventures, including Su-vastika, which is redefining the energy storage and power backup industry.
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