Insolvency and Bankruptcy Code (Amendment) Bill, 2019
August 15 , 2019 1845 days 749 0
The Bill amends the Insolvency and Bankruptcy Code, 2016.
Insolvency is a situation where individuals or companies are unable to repay their outstanding debt.
The Code provides a time-bound process for resolving insolvency in companies and among individuals.
Important Changes
Under the Code, a financial creditor may file an application before the National Company Law Tribunal (NCLT) for initiating the insolvency resolution process.
The NCLT must find the existence of default within 14 days.
Thereafter, a Committee of Creditors (CoC) consisting of financial creditors will be constituted for taking decisions regarding insolvency resolution.
The CoC will appoint a resolution professional who will present a resolution plan to the CoC.
Then the CoC must approve a resolution plan, and the resolution process must be completed within 180 days.
If the resolution plan is rejected by the CoC, the debtor will go into liquidation.
This may be extended by a period of up to 90 days if the extension is approved by NCLT.
The Code states that the insolvency resolution process must be completed within 180 days, extendable by a period of up to 90 days.
Now the Bill adds that the resolution process must be completed within 330 days.
Summary
The Bill addresses three important issues.
First, it strengthens provisions related to time-limits.
Second, it specifies the minimum pay-outs to operational creditors in any resolution plan.
Third, it specifies the manner in which the representative of a group of financial creditors (such as home-buyers) should vote.