The central government is considering reforms to the Insolvency and Bankruptcy Code (IBC) in order to adhere to time bound resolution of the companies. These reforms are likely to be taken up in the winter session of Parliament in December, sources tell Business Today Television.
The Ministry of Corporate Affairs (MCA) has conducted consultations with the required stakeholders in past few months to propose changes in the Insolvency and Bankruptcy code (Amendment) Bill, 2022.
The new bill is expected to have provisions for reducing time for admission of corporate insolvency resolution process, and fix a particular time period for tribunals for approval or rejection of resolution plans.
"We have received a host of measures that will help in quick resolutions. Recent amendments have also given powers to the committee of creditors," said an official.
The centre is also very keen to introduce cross-border insolvency as soon as possible. "We are not delaying it; we have even completed the required consultation,” the sources added.
The MCA has constituted an internal committee that is looking into applicability of cross border insolvency process. This cross-border Insolvency Rules committee proposed a regulatory framework that recommends foreign representatives must be given access to the insolvency process in India through IBBI authorisation system, said the official.
In August 2021, the parliamentary standing committee on finance, chaired by Bhartiya Janata Party (BJP) leader Jayant Sinha also questioned the role of IBC due to delays in resolution, low recovery rates, and rising liquidation cases, hinting that the law should not deviate from its aim of a quick resolution path to the stressed companies.
The standing committee report said that haircuts taken by lenders are as high as 95 per cent and more than 71 per cent of the cases are pending for more than 180 days. These, the report said, point to a deviation from the original objectives of the Code as intended by Parliament.
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