The Centre will promulgate an ordinance to further amend the insolvency law to remove ambiguities and shield successful bidders from prosecution for offences committed by previous promoters. The Cabinet, on Tuesday, approved an ordinance to amend the Insolvency and Bankruptcy Code (IBC) 2016, that would also help in ensuring smooth implementation of the law, said an official release.
The Code has already been amended thrice and a Bill to amend it was introduced in the Lok Sabha on December 12. Union Minister Prakash Javadekar told the media that the amendments would also help bring more clarity and facilitate FDI (foreign direct investment) inflows.
“Under the amendments, the liability of a corporate debtor for an offence committed prior to the commencement of the corporate insolvency resolution process shall cease,” the release said.
Further, the corporate debtor would not be prosecuted for such an offence from the date the resolution plan has been approved by the adjudicating authority, if the resolution plan results in the change in the management.