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Insolvency and Bankruptcy Code (Amendment) Bill, 2019
August 15 , 2019
2082 days
907
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- 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.
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