IBC bill to be tabled in budget session, Govt seeks more consultations to finalize amendments
New Delhi, 20 Dec (KNN) The Insolvency and Bankruptcy Code bill which was scheduled to be introduced in the winter session of parliament will now be tabled in the Budget session. The additional time is needed to include public feedback on the new suggestions that the ministry of corporate affairs will make in a new consultation paper.
The government has decided to hold a second round of public consultations, starting this week to finalize amendments to the Insolvency and Bankruptcy Code (IBC) to roll out a cross-border insolvency regime, as reported by mint.
The government wants to be double sure before making any significant changes to the bankruptcy code.
In the first round of consultation that ended on 15 December, ministry proposed adding a new chapter on cross-border insolvency, extending certain rights to domestic and foreign creditors when companies in multiple jurisdictions start sinking. The bill is also likely to address suggestions made by a parliamentary standing committee about improving the efficiency and outcomes of the bankruptcy resolution process.
The code has evolved rapidly with frequent amendments to be responsive to the changing needs, depending on broader trends in the economy. But it has led to litigation over the turnaround schemes proposed by lenders in many cases. Also, it has been used by operational creditors like vendors as a recovery tool.
Given the impact such changes could have on companies, the ministry of corporate affairs has limited the scope of a new low cost, alternative resolution scheme that was rolled out in April a pre-pack scheme to micro, small and medium enterprises till adequate working experience is gained. “During discussions with experts and bankers, several new ideas have come up regarding further amendments to the code. The second round of consultations will start shortly to seek public views on this," as reported by mint.
Given the strong foreign direct investment inflows even during the pandemic, rolling out a cross-border insolvency regime may further comfort foreign investors if an investment in India turns sour. The move to expand the new bankruptcy regime to tackle the failure of businesses present in multiple markets comes as the government is courting sovereign wealth funds and pension funds to invest in the infrastructure sector.
In the first consultation paper, the ministry proposed to let foreign creditors and bankruptcy professionals take part or initiate bankruptcy action in an Indian tribunal. The proposed new section in IBC—to be called Part Z— based on a UN model law would also cover Indian lenders requiring assistance in another country against Indian businesses and corporate guarantors with overseas assets.
from Indian News Websites https://ift.tt/3FdPn4Z
via IFTTT
Post a Comment
Post a Comment