In order to block potential loopholes in the new corporate turnaround regime and to ensure rescued companies remain in reliable hands, the Union cabinet has cleared the ordinance for making changes to the Insolvency and Bankruptcy Code (IBC). The Code, which became operational in December 2016, provides for a market-determined and time-bound insolvency resolution process.
The Corporate Affairs Minister Arun Jaitley has said that changes to the IBC have been proposed through an ordinance that’s awaiting presidential assent. He said changes are designed to prevent wilful defaulters from bidding for stressed assets. The move comes at a time when there are concerns in certain quarters about various aspects of the law, including the possibility of promoters wresting back control of a company under the insolvency process.
The ministry has already set up a 14-member committee to identify and suggest ways to address issues faced in implementation of the law. The Insolvency Law Committee, chaired by Corporate Affairs Secretary Injeti Srinivas, will take stock of the implementation of the Code. More than 300 cases have been admitted for resolution under the Code by the National Company Law Tribunal (NCLT). A case is taken up for resolution under the Code only after receiving approval of the NCLT for the same.
