Sick industrial unit
Also called: Sick unit, Industrial sickness · Topic: Industrial Policy, Public Sector, MSMEs and Disinvestment · NCERT: Beyond NCERT
Meaning
A sick industrial unit is a firm whose losses have wiped out its net worth, meaning what the owners would have left after paying all debts. It can also be a firm that keeps failing to repay its loans. Such units lock up bank credit, capital and workers. So India built legal routes either to revive them or to close them.
Example
SICA 1985 set up the BIFR (1987) to deal with sick companies. Cases often dragged on for years. SICA was repealed in 2016, and such cases now go under the Insolvency and Bankruptcy Code (IBC) 2016 to the NCLT, which decides between revival and liquidation.
Don't confuse with
- Non-performing asset (NPA): this is a bad loan as it appears on a bank's books. A sick unit is the borrowing firm itself.