Centre likely to review IBC Bill only after 2024 general elections

The Ministry of Corporate Affairs (MCA) is likely to revisit the amendments to the Insolvency and Bankruptcy Code (IBC) after general elections in July-August with a view to assess the changes that the Code requires, a person close to the development said.

“There is a need to relook at whether more changes are required and have discussions on how to proceed with the amendments,” the person, requesting anonymity, said.

The decision to revisit the proposed amendment Bill is also in the backdrop of frequent amendments that the IBC has undergone since its introduction in 2016. The law has been changed six times so far.

The latest round of amendments sought a complete overhaul of the Code, including a separate framework for real estate insolvency with certain exemptions. The draft Bill has also inserted an enabling clause to allow the government to increase the ambit of prepackaged insolvency for larger companies in the future.

Some of the other changes proposed by the MCA in its discussion paper include giving more power to the adjudicating authority and mandatory admission of insolvency applications filed by financial creditors.

While the inter-ministerial discussions on the Bill had concluded, there were issues on which consensus at the highest levels in the government was yet to be achieved. Cross-border insolvency, group insolvency, and a fast-track mechanism are some of the topics where discussion was still ongoing.

However, the proposed Bill aside, several amendments to the regulations by the Insolvency and Bankruptcy Board of India (IBBI) have given more powers to different parties in the Corporate Insolvency Resolution Process (CIRP), including the resolution professional, committee of creditors (CoC), and authorised representatives of a class of creditors, such as the home buyers.

Specifically for real estate insolvencies, the IBBI has proposed a series of changes that would not require any changes to the law itself. To give relief to the homebuyers, the insolvency regulator has proposed, for instance, that property in possession of allottees should be excluded from the resolution process and the liquidation estate during the corporate insolvency resolution process.

The IBBI is also considering that through its regulations, it could come up with a resolution mechanism tailor-made to address the needs of the real estate sector to provide for project-based insolvency and also allow homebuyers to become Resolution Applicants.

Given some of these measures, the MCA could reconsider some of the amendments to the law, sources indicated.

On the table

• Complete overhaul of the IBC
• Separate framework for real estate insolvency with exemptions
• Enabling clause to increase the ambit of pre-packaged insolvency for larger firms
• Cross-border and group insolvency