On Wednesday, Finance Minister Nirmala Sitharaman has proposed The Insolvency and Bankruptcy Code (Amendment) Bill 2019 in the Rajya Sabha.
The aim of proposed amendments to the Code is filling critical gaps in the corporate insolvency resolution framework while at the same time maximizing value from resolution.
Seven amendments have been proposed to the Insolvency and Bankruptcy Code. These amendments will provide:
- For faster resolution of bad loans
- Timely completion of debt resolution process under IBC
- Provides more clarity on the rights of stakeholders
- Timely admission of applications and timely completion of the corporate insolvency resolution process etc.
- The bill provides that if an application has not been admitted or rejected within 14 days by the adjudicating authority, it shall provide the reasons for fails to admit or reject the received application in writing for the same.
- The deadline for completion of CIRP (Corporate Insolvency Resolution Process) is now limited to 330 days, including litigation and other judicial processes.
- The IBC also aims in providing greater clarity on the rights and duties of authorized representatives of voters, the permissibility of corporate restructuring schemes, manner of distribution of amounts amongst financial and operational creditors as well as the applicability of the resolution plan on all statutory authorities.
- An explanation in the definition of “resolution plan” is added to clarify that a resolution plan proposing the insolvency resolution of the corporate debtor as a going concern may include the provisions for corporate restructuring, including by way of merger, amalgamation and demerger.
- According to the bill, the Committee of Creditors may now take the decision to liquidate the corporate debtor. This can be done any time after the Committee of Creditors has been constituted and before preparation of Information Memorandum.
- Provision has been made for votes of all financial creditors covered under section 21(6A). The votes shall be cast in accordance with the decision approved by the highest voting share (more than 50%) of financial creditors on present and voting basis.
- The bill also says that the resolution plan will be binding on all the stakeholders including the Central Government, any State Government or local authority to whom the debt is owed.