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Time of India

FM tables IBC amendment bill to speed up insolvency cases

Union Finance Minister Nirmala Sitharaman speaks in Lok Sabha during the Monsoon Session of Parliament, in New Delhi on Tuesday. (Sansad TV/ANI Video Grab) NEW DELHI: Finance minister Nirmala Sitharaman on Tuesday introduced amendments to the Insolvency and Bankruptcy Code (IBC), aimed at making the law more effective and speed up the process, while proposing an out-of-court mechanism to address genuine business failures, domestic group insolvency and cross-border insolvency frameworks. The bill, which has been in the pipeline for over a year, was referred to a select committee, which will submit its report in the next session of Parliament. "Once implemented, this will help ease the burden on judicial systems, promote ease of doing business and improve access to credit," Sitharaman said. With cases taking 434 days to be admitted against the mandated 14 days, the bill seeks to amend section 7 to specify that an application for initiating corporate insolvency action by financial creditors shall be admitted if a default exists, and no other grounds shall be considered for deciding such an application. In case of a plea by a financial institution, records from information utilities will be sufficient evidence to ascertain if there is a default. Besides, the definition of resolution plans is proposed to be expanded to include sale of assets and the right of the corporate applicant to propose the resolution professional is restricted to ensure fairer and more transparent appointments. The proposed amendments restrict withdrawal of applications before the constitution of the committee of creditors and after the first invitation of the resolution plans and also enable continuation of avoidance transaction proceedings post the resolution process. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Learn 57+ Languages Easily with AI [Join] Talkpal AI Sign Up Undo Further, enhancement of recoveries from avoidance transactions, wrongful and fraudulent trading by extending the look back period and allowing creditors to also file for these transactions have been included to maximise asset value. The liquidation process is also sought to be speeded up by empowering the committee of creditors to supervise it, including a provision for replacing the liquidator by a 66% vote, and extending the moratorium available under the corporate insolvency resolution process to the liquidation process (CIRP) in a bid to speed up company dissolution. The proposals allow the Adjudicating Authority to restore CIRP once on the request of the committee of creditors, to enable potential rescue of viable companies. The committee of creditors can also recommend direct dissolution if assets are negligible and can retain or appoint the resolution professional as liquidator. The bill also seeks to introduce a Creditor Initiated Insolvency Resolution Process and do away with fast-track CIRP, which has seen low interest. creditor-initiated insolvency resolution process (CIIRP) is being pushed as a new tool to speed up resolution, while preserving the asset value. Under this process, select FIs can initiate insolvency outside court with approval from unrelated financial institutions, while the corporate debtor can continue to manage the company with oversight from a resolution professional, who would attend meetings of the board of directors and have veto powers. Stay informed with the latest business news, updates on bank holidays , public holidays , current gold rate and silver price .