Shorten time lines for bankruptcy process: Par panel

Government should shorten the time lines proposed in the bankruptcy code for completion of various processes for liquidation and bankruptcy of insolvent entities, a Parliamentary panel said today.
The Joint Committee on 'Insolvency and Bankruptcy Code, 2015' in its report tabled in Parliament also said that IT infrastructure of various tribunals and appellate authorities should be upgraded for fast-tracking the liquidation process under the Code.
"The Committee reviewed the time lines provided for various processes during the course of insolvency, liquidation and bankruptcy and decided to reduce the time period given under (different clauses)" to expedite the process, the report said.

It suggested that the time for filing an appeal in the Supreme Court against the order of NCLT should be brought down to 45 days from the proposed 60 days. It also suggested reduced time period in host of other clauses proposed in the Bill, which was tabled in Lok Sabha in December last year.
The 30-member Committee headed by Bhupinder Yadav underlined the need for capacity building of the professionals in the field of insolvency and bankruptcy for effective and speedier implementation of the Code.
The Committee said in case of insolvency, interest of the workers should be fully protected and they should be given dues for 24 months as against 12 months proposed in the bill.

"All sums due to any workman or employee from the provident fund, the pension fund and the gratuity fund should not be included in the liquidation estate assets and estate of the bankrupt," it said.

Further, the personal ornaments beyond a certain value should not fall under the category of as excluded assets (which do not become part of liquidation process).
Currently, there is no single law dealing with insolvency and bankruptcy. Liquidation of Companies is handled by the High Courts, individual cases are dealt with under the Presidency Towns Insolvency Act, 1909 and Provincial Insolvency Act, 1920.
Other laws that deal with this issue include SICA, 1985; Recovery of Debt Due to Banks and Financial Institution Acts, 1993; Sarfaesi Act, 2002 and Companies Act, 2013.

The Joint Committee report further said there should be a model law which could be uniformly adopted by different insolvency professional agencies.
It could deal with issues like standards of professional competency, penalty against unprofessional conduct and monitoring the working of insolvency professionals.
The bill aims at promoting investments, leading to higher economic growth.
It also provides for setting up of a 'Insolvency and Bankruptcy Board of India' to regulate professionals, agencies and information utilities engaged in resolution of insolvencies of companies, partnership firms and individuals.
Observing that an over secured creditor may unreasonably withhold his consent for liquidation, the Committee suggested that "it need to be provided that the consent of such creditor shall not be required where and, to the extent, the value of unencumbered property is more than twice the interest of such creditor".