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Indian Express
13 minutes ago
- Indian Express
With IBC Amendment Bill, govt hopes to expedite insolvency process, maximise value: Key takeaways
The much-awaited bill to amend the Insolvency and Bankruptcy Code (IBC) was introduced in the Lok Sabha on Tuesday by Finance Minister Nirmala Sitharaman, who said that the proposed changes are aimed at reducing delays, maximising value for all stakeholders, and improving governance of all processes under the Code. The proposed modifications include provisions to ensure faster admission of insolvency cases, an out-of-court mechanism to address 'genuine business failures', and introduction of group and cross-border insolvency frameworks, and a slew of others. Introduced in 2016, the IBC promised an overhaul of insolvency resolution with the aim to rescue and reorganise distressed companies through a time-bound process, prioritising their survival as going concerns. While the IBC has fostered a culture of accountability and credit discipline among debtors, its efficiency has been undermined by procedural delays, shortage of personnel, deviations from key principles, and slow implementation of critical provisions. Although the IBC has had a few successes, it has been marred by issues like high case backlog, lengthy delays in admission and resolution, and steep haircuts for creditors. Over the past couple of years, various stakeholders flagged concerns and the need to rethink the IBC's design. The amendment bill—referred to a select committee for consultations—is expected to help make the insolvency resolution process swifter and efficient, in addition to being in line with international best practices. The proposed amendments are to facilitate faster admission, resolution, and liquidation, maximise asset value, and improve governance. Changes to deal with admission delays One of the key changes proposed in the amendment bill is that an insolvency application filed by a financial creditor 'must' be admitted if the default is proven, procedural compliance is met, and there are no disciplinary proceedings against the resolution professional. This means that there will be no real scope for rejecting such applications on additional grounds, and the default would be the only real ground for consideration of an insolvency application. The bill also clarifies that records from financial institutions are to be considered as sufficient and conclusive proof of default by the debtor. While the National Company Law Tribunal (NCLT) should ideally decide on whether a case can be admitted under the IBC within 14 days of an insolvency application, it often takes months and sometimes even over a year to initiate insolvency proceedings. The average time taken for admission is around 434 days. In 2022, the Supreme Court had held that admission within 14 days was not a mandatory provision of the IBC and that the NCLT had discretionary powers on deciding whether or not to admit the insolvency application. This meant that the NCLT, instead of considering just the default as the sole basis of admission, was to also consider the default's circumstances and the debtor's arguments. That is going to change if the bill is enacted in its current form. The amendment bill also stipulates that the adjudicating authority — the NCLT — should strictly enforce the 14-day timeline to decide on admission of insolvency applications, and if there is a delay, it would need to 'record the reasons for such delay in writing'. Out-of-court initiation mechanism option The bill proposes a creditor-initiated insolvency resolution process (CIIRP), with an out-of-court initiation mechanism for 'genuine business failures' to facilitate faster and more cost-effective insolvency resolution with minimal business disruption. According to the government, once implemented, this will help ease the burden on the judicial system, promote ease of doing business, and improve access to credit. As per the proposed amendments, for CIIRP, a financial creditor would have to get the consent of creditors representing at least 51 per cent of the debtor's outstanding debt. Meanwhile, the corporate debtor can continue to manage the company with oversight from a resolution professional, who would attend board meetings and will have veto powers. The CIIRP process would be required to be concluded within 150 days. If there is failure to reach a resolution within that time frame or the plan is rejected, the CIIRP can be converted into a standard corporate insolvency resolution process (CIRP) under the IBC framework. Group and cross-border insolvency frameworks The bill has proposed a group insolvency framework, which seeks to resolve insolvencies that involve complex corporate group structures. Essentially, it would facilitate coordinated insolvency proceedings involving entities of the same corporate groups, instead of individual proceedings for each debtor separately. The proposed framework is aimed at minimising value destruction caused by fragmented proceedings involving individual companies that are part of the same corporate group, and helping creditors to maximise value through coordinated decision-making in such cases. As per the bill, the government can prescribe how insolvency proceedings against more than one debtors within a corporate group should be handled. This would potentially allow having a common resolution professional for group companies and a joint panel of committee of creditors (CoC) of the group companies, among other measures, to save time and costs. The cross-border insolvency framework proposed in the bill aims to lay the foundation for protecting stakeholder interests in domestic and foreign insolvency proceedings, promoting investor confidence, and aligning the framework in India with global best practices. This is expected to improve the recognition of India's insolvency process in overseas jurisdictions, and help with recovery of foreign assets of corporate debtors undergoing insolvency proceedings in India. Other key provisions The amendment bill has proposed changes to improve the efficiency and oversight in the liquidation process by authorising the CoC to supervise liquidation. It includes a provision to allow the CoC to replace the liquidator through a 66 per cent vote. The proposed changes also include extending the moratorium on assets available under the CIRP to the liquidation process in a bid to expedite dissolution. The bill's provisions also allow the adjudicating authority to restore the CIRP once — on the request of the CoC — thereby facilitating the potential rescue of viable companies. The CoC can recommend direct dissolution if assets are negligible, and will be empowered to retain or appoint the resolution professional as liquidator, according to the provisions of the bill. The bill also proposes to expand the definition of resolution plans to include sale of assets. It also restricts the right of the corporate applicant to propose the resolution professional to ensure fairer and more transparent appointments. The amendments also propose restricting the withdrawal of CIRP applications before the constitution of the CoC and after the first invitation of the resolution plans, and also enable continuation of avoidance transaction proceedings after the resolution process has concluded. Other proposed changes include removal of the interim moratorium for personal guarantors and introduction of a provision to prevent transactions that defraud creditors. The priority of government dues is also clarified in the bill.
Mint
13 minutes ago
- Mint
Trump to visit Kennedy Center, announce names of 2025 honorees
Trump plans to renovate the arts venue Trump fired chairman in February and assumed the role Bill introduced to rename Kennedy Center for Trump WASHINGTON, Aug 13 (Reuters) - U.S. President Donald Trump will visit the John F. Kennedy Center for the Performing Arts on Wednesday to unveil its 2025 honorees for artistic excellence and tout a major renovation as lawmakers push to rename the venue for the Republican president. In a post on his Truth Social platform on Tuesday, Trump teased the announcement, saying, "GREAT Nominees for the TRUMP/KENNEDY CENTER, whoops, I mean, KENNEDY CENTER, AWARDS." Trump also teased a physical overhaul of the center in Washington, D.C., saying he planned to restore it to the "absolutely top level of luxury, glamour, and entertainment." No details were immediately available. Since returning to power in January, Trump has sought to put his stamp on American culture and institutions to align them closer with his political and personal preferences. His administration has ordered a review of some Smithsonian museums and exhibitions to "remove divisive or partisan narratives." At the White House, Trump has added gold leaf to the Oval Office, paved over the Rose Garden, and embarked on plans for a $200-million ballroom. Trump did not attend events at the Kennedy Center during his first term but has taken a keen interest in it during his second, vowing to overhaul an institution he and his "Make America Great Again" supporters view as too liberal. He pushed out its chairman in February and took on the role himself, fired its longtime president, and installed his former ambassador to Germany, Richard Grenell, as interim president. In a post on X, the Kennedy Center said its building - which opened in September 1971 - would undergo renovations thanks to Trump's advocacy aimed at restoring its "prestige and grandeur." The arts facility also hinted at the 2025 winners: "A country music icon, an Englishman, a New York City Rock band, a dance Queen and a multi-billion dollar Actor walk into the Kennedy Center Opera House…." Republicans recently voted as part of a sweeping tax cut and spending bill to earmark $257 million for the building's renovation, conditional on the opera house being named after first lady Melania Trump. Republican Representative Bob Onder in July introduced a bill that would rename the modernist building the Donald J. Trump Center for the Performing Arts. Trump last visited the Kennedy Center in June for a performance of "Les Miserables," where he and his wife were met with a loud mix of boos and cheers. Ticket and subscription sales have fallen since Trump's conservative takeover of the venue, and some shows, including the hit "Hamilton," have canceled their engagements. Under his leadership, the center has sought to add conservative-leaning programming, including a show that Grenell has described as a celebration of the birth of Christ. (Reporting by Andrea Shalal Editing by Colleen Jenkins and Rod Nickel)
Mint
13 minutes ago
- Mint
'They didnt choose streets but...': Kichcha Sudeepa urges to 'kindly adopt' indie dogs after SCs order
Bengaluru (Karnataka) [India], August 13 (ANI): Actor Kichcha Sudeepa has reacted to the Supreme Court's recent order to move all stray dogs in Delhi-NCR to shelters within eight weeks. In his post on X (formerly Twitter), the actor said that while he does not want to question the court's decision, which "may have its reasons," he is worried about the "well-being" of the animals and how it will affect their lives. Sudeepa shared that he has grown up around community dogs and his family has also adopted Indian breeds. He described the "love and loyalty" they bring into people's lives, adding that the dogs did not choose the streets, but humans can choose to give them a home. "The Supreme Court's decision to round up the stray dogs in Delhi NCR and to be kept in shelters permanently isn't something I wanna question as this decision may have its reasons. But it also raises serious concerns about their well-being and the impact on their lives," Sudeepa wrote. "Having grown up around community dogs, and with my family adopting Indies, I can attest to the love and loyalty they bring. They didn't choose the streets but we can choose to give them a home. We surely can be the voice for the voiceless. Kindly adopt," he continued. On August 11, a bench of Justices Pardiwala and R Mahadevan took a stern view of the stray dog menace and ordered the Delhi-NCR to start removing stray dogs from all localities within eight weeks and house them in dedicated dog shelters to be set up by civic authorities. It said that all localities should be made free of stray dogs and there should not be any compromise, while making it clear that no captured animal will be released back on the streets. It also ordered contempt proceedings against any individual or organisation that attempts to obstruct the authorities from carrying out the capture drive. The order of the top court came on a suo motu proceedings initiated by it over a media report on the growing menace of stray dog attacks leading to rabies. Terming the news report as "very disturbing and alarming", the bench had said that day the news report revealed that the elderly and children were the most affected by rabies from dog bite incidents. (ANI)
