The Government has sanctioned multiple amendments to the Insolvency Law to assure timely completion of the resolution process along with shedding light on the rights. A total of seven amendments would be made to the Insolvency and Bankruptcy Code that will prove beneficial to resolve cases related to the stressed assets.
These amendments are introduced with to fill in the critical gaps in the corporate insolvency resolution guideline while maximizing value from the resolution process, an official release said.
Sources close to the development said that the amendments are likely to offer timely admission of applications and completion of the corporate insolvency resolution process in the due course of time.
This amended Code would also offer more clarity on the permissibility of corporate restructuring schemes, rights and duties of authorized representatives of voters, manner of distribution of amounts amongst financial and operational creditors and applicability of the resolution plan on all statutory authorities, they added.
The Cabinet has sanctioned the Insolvency and Bankruptcy Code (Amendment) Bill, 2019.
In the release, it is informed that the amendments would “enable the government to ensure maximization of value of a corporate debtor as a going concern while simultaneously adhering to strict timelines.
In September 2018, the Government decided to set up eight special courts under the National Company Law Tribunal to resolve insolvency cases at a fast pace. The Ministry of Corporate Affairs tabled this proposal with the aim to put cases like harassment of the homebuyers on fast track.
According to a senior Govt. official, in recent times, there has been a substantial increase in the number of cases under the Insolvency and Bankruptcy Code, which provides for market-determined resolution in a time-bound manner.
Corporate Affairs Secretary Injeti Srinivas informed that these courts are proposed to be set up in Mumbai, Delhi, Chennai, Kolkata, and Hyderabad. The proposal aims to reduce the mounting burden on the tribunal despite it is having 11 benches all over India.