New Delhi, May 5 -- Last week, the Supreme Court set aside the acquisition of Bhushan Power and Steel Ltd by JSW Steel. This raises fresh questions about the integrity of how insolvencies are resolved in India.

The mechanism under the Insolvency and Bankruptcy Code enacted in 2016 has had some success in offering a pathway for insolvent companies to either be acquired or dissolved for their assets to be reallotted. But in this case, the top court ruled JSW's resolution plan illegal and poorly implemented, and found that the Committee of Creditors and resolution professional had failed to abide by the code.

As a result, four years after the case was thought to have been resolved, the court didn't just scrap JSW Steel's purchase, but aske...