Minister of Finance & Corporate Affairs of India, Nirmala Sitharaman, presented a bill to amend the Insolvency and Bankruptcy Code in the Lok Sabha on Tuesday. Following a request from the minister, the Insolvency and Bankruptcy Amendment Bill was referred to a select committee of the House after its introduction. It is implemented by the Corporate Affairs Ministry, which the Finance Minister also helms.
The objective of the bill is to add particular new provisions for improved implementation of the code. The amendment focuses on reducing delays, increasing value for all shareholders, and ensuring effective governance of all processes outlined in the code.
In 2016, the Law was introduced, and its six legislative interventions were enacted; the last amendment was made in 2021.
Bill outlines a resolution for creditor-initiated insolvency, featuring an out-of-court initiation mechanism aimed at addressing actual business failures to promote a quicker and more cost-effective process. The bill includes provisions for both group insolvency and cross-border insolvency.
“The cross-border insolvency framework seeks to lay the foundation for protecting stakeholder interests in domestic and foreign proceedings, promoting investor confidence, and aligning domestic practices with international best practices,” the bill states.
This bill introduces penalties for frivolous proceedings before adjudication, empowering the authority to discourage such actions and postpone the insolvency resolution and liquidation process.
Also read: CXO Role Centred on Ethics, Equity & Impact
Another initiated amendment states that the bill also involves IRP and liquidator assignment alongside RPs under the 10 assignments limits, to ensure an equal distribution of work.
