Parliamentary panel to review IBC and propose reforms for efficiency

The Centre is expected to table an amendment Bill in the monsoon session as a parliamentary panel examines the Code amid concerns flagged by the Supreme Court

A parliamentary panel is taking a comprehensive look at the Insolvency and Bankruptcy Code (IBC) to suggest the changes and measures that need to be taken to make it more efficient, a senior government official said.

 

‘The committee is looking at IBC in totality, just as they did with the Competition Law as well,’ the senior official said.

 

The government is expected to bring the IBC Amendment Bill in Parliament in the upcoming monsoon session.

 

Several Supreme Court rulings in the recent past have pointed to gaps in the implementation of the IBC, the latest being the Bhushan Power and Steel and JSW matter. 

 

The court noted gross non-compliance with the mandatory provisions of the IBC and the regulations, and a dishonest and fraudulent attempt made by JSW, misusing the process of the court by not making the upfront payments as committed by it for about two and a half years, and thereby enriching itself unjustly. The top court also said that JSW sought to comply with the terms of the resolution plan at a very belated stage, in collusion with the committee of creditors (CoC) and the resolution professional (RP).

 

In another order related to the liquidation of Jet Airways, the Supreme Court called the case an ‘eye-opener’ that has brought to light the deficiencies in the IBC. The court suggested that the central government or the Insolvency and Bankruptcy Board of India (IBBI) explore the possibilities of better enforcement of the standards and practices enumerated in the guidelines through an independent mechanism under the auspices of an oversight committee, instead of making them self-regulatory.

 

The ruling by the court rejecting the AGI Greenpac bid for Hindustan National Glass for not obtaining prior approval from the Competition Commission of India (CCI) has also led the government to file review petitions in the matter.

 

The Ministry of Corporate Affairs (MCA) is considering amending the Code to clarify that prior permission of the CCI is not required for submitting bids under the corporate insolvency resolution process, government sources indicated.