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Govt introduces IBC Amendment Bill with group, cross-border reforms
The proposed amendments include changes to Section 7 of the Code, which deals with initiation of insolvency by a financial creditor. It enables mandatory admission of an application for the corporate insolvency resolution process once the default is established, no disciplinary proceedings are pending against the proposed resolution professional, and other procedural requirements are met.
'The proposed amendments aim to reduce delays, maximise value for all stakeholders, and improve governance of all processes under the Code,' Finance Minister Nirmala Sitharaman stated in the Bill's statement of objects and reasons.
She added that the proposed changes seek to modify existing provisions to better align with the overall objectives of the Code and to introduce new provisions following global best practices for resolving insolvency.
Being amended for the seventh time since its inception, the IBC now proposes an out-of-court initiation mechanism for genuine business failures to facilitate faster and more cost-effective insolvency resolution with minimal business disruption, as part of a creditor-initiated resolution process.
The aim is to ease the burden on judicial systems, promote ease of doing business, and improve access to credit.
The group insolvency framework in the Bill seeks to efficiently resolve insolvencies involving complex corporate group structures, minimise value destruction caused by fragmented proceedings, and maximise creditor recoveries through coordinated decision-making.
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