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The government of India is working on amending the provisions under the Insolvency and Bankruptcy Code (IBC) to open up the distressed assets in India to overseas creditors to recover the dues. According to a report by Livemint, an amendment bill was to be introduced in the Monsoon Session of the Parliament. The government, however, decided to make further changes to the bill before introducing it in the winter session.
The changes will make amends to the cross-border insolvency regime. Among other changes, the bill will make it easier for overseas creditors to participate in the legal proceedings in Indian tribunals.
"All efforts are being made so that the Bill can be tabled in the winter session of Parliament. Given that public consultation has been done multiple times, reworking of the proposals will be an internal exercise," the report quoted a person aware of the matter.
Currently, the bankruptcy courts in India and in other countries co-operate to solve the cases. Indian tribunals take the legal action on behalf of the foreign creditors.
With the changes, the businesses that operate in multiple jurisdictions will be able to file for insolvency easily. The Indian creditors will also be able to recover their dues by selling off the overseas assets quickly, the report added. It is being seen as a major step forward in expediting the rescue of debt-laden businesses.
The experts have been suggesting several changes to the existing IBC. Because it allows several companies to 'sail through' their financial troubles.
In a case in July, the Supreme Court of India said that the bankruptcy tribunals should not decide the cases only on the basis of payment defaults by the corporate debtors. They should consider other factors as well.
The case, in which the judgement was announced, was regarding a power company that was offered a 'favourable' award from an electricity tribunal. The case had been registered only due to a payment default.
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First Published: Mon, August 15 2022. 11:19 IST