FM introduces bill in RS for faster resolution of bad loans

New Delhi: The Government on Wednesday introduced The Insolvency and Bankruptcy Code (Amendment) Bill 2019, that seeks to ensure timely completion of debt resolution process and provide more clarity on rights of stakeholders.

Finance Minister Nirmala Sitharaman introduced the bill seeking as many as seven amendments to the Insolvency and Bankruptcy Code, which provides for resolution of bad loans. The proposed amendments to the Code are aimed at filling critical gaps in the corporate insolvency resolution framework while at the same time maximising value from resolution. The changes in the law are aimed at timely admission of applications and timely completion of the corporate insolvency resolution process.

The bill also provides that if an application has not been admitted or rejected within 14 days by the adjudicating authority, it shall provide the reasons in writing for the same.

The bill also provides a deadline for completion of CIRP (Corporate Insolvency Resolution Process) within an overall limit of 330 days, including litigation and other judicial processes. The proposed amended Code is also aimed at providing greater clarity on permissibility of corporate restructuring schemes, clarity on rights and duties of authorised representatives of voters, manner of distribution of amounts amongst financial and operational creditors as well as applicability of the resolution plan on all statutory authorities. It also provides that the votes of all financial creditors covered under section 21(6A) shall be cast in accordance with the decision approved by the highest voting share (more than 50%) of financial creditors on present and voting basis.