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Government Set To Overhaul Insolvency And Bankruptcy Code
India’s Finance Minister Arun Jaitley (RAVEENDRAN/AFP/Getty Images)
Acting on recommendations of an expert panel, the government is set to overhaul the Insolvency and Bankruptcy Code, Mint has reported.
Ministry of Corporate Affairs is finalising a series of amendments recommended by a panel to remove difficulties in turning around businesses and to strike a balance between the interests of lenders, customers and promoters.
The panel, led by corporate affairs secretary Injeti Srinivas, has suggested treating homebuyers as financial creditors.
Another amendment proposed by the experts will make it easier for the panel of creditors to make key decisions for resolution or liquidation with 66 per cent of the vote, less than the 75 per cent required currently.
The proposed amendments will redefine entities disqualified from bidding for bankrupt firms. Amendment will ensure that that the provisions to disqualify wilful defaulters from bidding for bankrupt firms do not bar entities like asset reconstruction companies (ARCs), banks and alternative investment funds.
After the code is amended, ARCs will find it easier to provide interim finance to companies undergoing bankruptcy process. This will facilitate quick turnaround by improving the valuation of the companies. It will also ensure that regulator dues are not considered as operational credit.
The code came into force in November 2016.
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