The Union government is likely to further amend the Insolvency and Bankruptcy Code (IBC) to provide immunity to companies taking over stressed assets from prosecution for financial crimes committed by erstwhile promoters, PTI reported.
The government is likely to move the amendment to the Insolvency and Bankruptcy Code 2016 during the current Winter Session of Parliament.
This amendment will expedite the insolvency process including the final closure of Bhushan Power and Steel (BPSL) case.
As the new promoters JSW Steel has been seeking immunity against the criminal investigations against the erstwhile promoters of BPSL.
As foreseen by JSW Steel, the Enforcement Directorate (ED), as part of its investigation, has attached the properties of BPSL under Prevention of Money Laundering Act (PMLA). Despite National Company Law Appellate Tribunal (NCLAT) directions, ED has refused to lift the freeze on sale of BPSL.
ED has attached BPSL's land, buildings, plant and machinery in Odisha worth more than Rs 4,000 crore over alleged diversion of bank funds,
While the ED is of the opinion that it can attach the property of BPSL under the Prevention of Money Laundering Act, the ministry has been maintaining that the agency cannot do so as proceedings under the IBC are on.
Due to the resulting stalemate, banks are yet to receive ₹19,350 crore from JSW Steel for acquiring Bhushan Power and Steel (BPSL) even after National Company Law Tribunal (NCLT) approving its resolution plan.
"We are working out a mechanism where the resolution applicant, who through this entire court supervised process is acquiring a stressed asset as a going concern, will not be encumbered by the criminal liability relating to the company which has been caused by the previous management," an official said.
A clear direction on this will not allow occurrence of cases like Bhushan Power and Steel Ltd. (BPSL).
Following the development, the NCLAT asked the ED and the Corporate affairs Ministry to reach a consensus on the issue of attachment of assets of BPSL.
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