Finance Minister Nirmala Sitharaman on Thursday introduced a bill in the Lok Sabha to amend the Insolvency and Bankruptcy Code. The Insolvency and Bankruptcy Code (Second Amendment) Bill, 2019 was approved by the Union Cabinet on Wednesday. The amendments in the law seek to remove bottlenecks and streamline the corporate insolvency resolution process, wherein successful bidders will be ring fenced from any risk of criminal proceedings for offences committed by previous promoters of companies concerned.
The Insolvency and Bankruptcy Code, which came into force in 2016, has already been amended thrice. The latest changes pertain to various sections as well as introduction of a new section. Earlier on Wednesday, the Union Cabinet had approved changes to the insolvency law, including provision to ring - fence successful resolution applicants from criminal proceedings with regard to offences committed by previous promoters of a company.
The amendments to the Insolvency and Bankruptcy Code (IBC) are aimed at removing certain difficulties being faced during insolvency resolution process to realise the objects of the Code and to further ease doing of business, an official release said. The IBC (Second Amendment) Bill, 2019, seeks to change various sections as well as insert a new section in the law.
According to the release, the amendments would remove bottlenecks, streamline the corporate insolvency resolution process and that protection of last mile funding would boost investment in financially-distressed sectors.
"Additional thresholds introduced for financial creditors represented by an authorized representative due to large numbers in order to prevent frivolous triggering of Corporate Insolvency Resolution Process (CIRP)," it added.
In a significant move, there would be ring-fencing of corporate debtor resolved under the IBC in favour of a successful resolution applicant from criminal proceedings against offences committed by previous management/ promoters.
The amended Act would also ensure that the substratum of the business of corporate debtor is not lost. It can continue as a going concern by clarifying that the licences, permits, concessions, clearances etc. cannot be terminated or suspended or not renewed during the moratorium period, the release said.