Bankruptcy law: Banks, ARCs and FPIs can bid for insolvent companies

Sources in the corporate affairs ministry say they are working with the law ministry on the wording of other changes

Banks, asset reconstruction companies (ARCs) and foreign portfolio investors (FPIs) are to be allowed to bid for insolvent companies. 

This is part of the ordinance the Union Cabinet approved last week, to change the current Insolvency and Bankruptcy Code (IBC). It has to be approved by the President for taking effect; this is expected by the weekend.

The change is in Section 29 (A) of the IBC, added to this law to bar defaulting promoters, defined as those with bad debts for over a year till the time a case for insolvency was admitted by the National Company Law Tribunal (NCLT). Also,