Cabinet approves proposal to carry out 7 amendments to Insolvency and Bankruptcy Code, 2016

The Union Cabinet on Wednesday approved the proposal to carry out 7 amendments to the Insolvency and Bankruptcy Code, 2016 through the Insolvency and Bankruptcy Code (Amendment) Bill, 2019.

According to an official statement, the amendments aim to fill critical gaps in the corporate insolvency resolution framework as enshrined in the Code, while simultaneously maximising value from the Corporate Insolvency Resolution Process (CRIP).

"This will enable the government to ensure the maximization of value of a corporate debtor as a going concern while simultaneously adhering to strict timelines."

Listing the salient features of the seven amendments to the Insolvency and Bankruptcy Code, the statement says: "Clarity on allowing comprehensive corporate restructuring schemes such as mergers, demergers, amalgamations, etc., as part of the resolution plan.

"Greater emphasis on the need for time-bound disposal at application stage. A deadline for completion of CSRP within an overall limit of 330 days, including litigation and other judicial processes."

"Vote of all financial creditors covered under section 21 (6A) shall be cast in accordance with the decision approved by the highest voting share (more than 50 per cent) of financial creditors on present and voting basis," it said.

The statement further said: "A specific provision that financial creditors who have not voted in favour of the resolution plan and operational creditors shall receive at least the amount that would have been received by them if the amount to be distributed under the resolution plan had been distributed in accordance with section 53 of the Code or the amount that would have been received if the liquidation value of the corporate debtor had been distributed in accordance with section 53 of the Code, whichever is higher... This will have retrospective effect where the resolution plan has not attained finality or has been appealed against."

"Inclusion of commercial consideration in the manner of distribution proposed in the resolution plan, within the powers of the Committee of Creditors. Clarity that! the plan shall be binding on all the stakeholders including the Central Government, any State Government or local authority to whom a debt in respect of the payment of the dues may be owed."

"Clarity that the Committee of Creditors may take the decision to liquidate the corporate debtor, any time after the constitution of the Committee of Creditors and before preparation of Information Memorandum," added the statement.