No changes in Insolvency and Bankruptcy Code till Sept
PrintListen to this Article
The confusion and ambiguity in the Insolvency and Bankruptcy Code (IBC) will continue for some more time, as the Central government is planning to wait for two more quarters before proposing any changes in the code, as it seeks more clarity on the issue.
The government had formed a 14-member Insolvency Law Committee to give suggestions on many ambiguous issues, including relaxing norms for MSMEs, ambiguity over homebuyers, and reforming the process of recovery.
The committee had made various suggestions to the Ministry of Corporate Affairs. However, the ministry now wants more time before making any changes in the code.
“Many recommendations have come and we are already evaluating them. However, the recommendations alone will not be able to handle all ambiguity. So we will take some more time before going for making a change. We will wait at least two more quarters, till September 2018,” a senior official in the Ministry of Corporate Affairs told The New Indian Express.
Another reason the official gave is that the committee’s recommendations have not been able to address all the ambiguities.
For instance, the committee has recommended that homebuyers be treated as financial creditors and argued that non-inclusion of homebuyers in the definition of ‘financial’ or ‘operational’ creditors deprives them of the right to initiate the insolvency process. However, real estate developers argue that treating homebuyers as financial creditors would be in conflict with RERA regulations.
Another point of ambiguity is Section 29A of the IBC code. The section says that any person acting jointly or in concert with an ineligible person or related to the ineligible person is barred from submitting a resolution plan. The committee had pointed out that this clause would shrink the pool of resolution applicants.
The ministry, on the other hand, feels that relaxing the clause too much will defeat the purpose of the law as many frauds are being conducted in collusion with banks. It feels that relaxing the norms for creditors and bidders too much would defeat the very purpose of creating the code.
➊ 14-member panel’s recommendations not conclusive, says ministry
➋ It will seek more opinions from the industry and policy experts
➌ Wants to wait till September end before implementing recommendations
➍ Points of ambiguity: Section 29, home-buyers and relaxed norms for creditors
➎ Government feels too relaxed norms for creditors will dilute the purpose of IBC
#casansaar (Source - NewIndianExpress)
Category : Insolvent Professional | Comments : 0 | Hits : 681
The National Company Law Tribunal (NCLT) on Monday ordered insolvency proceedings against media baron Subhash Chandra on a plea filed by Indiabulls Housing Finance. A two-member Delhi bench of the NCLT directed initiation of personal insolvency proceedings against Zee Entertainment Enterprises Ltd (ZEEL) Chairman Emeritus Chandra, who was a guarantor for a loan given to Essel group firm Vivek Infracon Ltd. The NCLT bench, consisting members Ashok K Bhardwaj and Subrata K Das,...
IBBI invites suggestions to simplify, ease & reduce cost of compliance of Regulations notified under IBC
The Insolvency and Bankruptcy Board of India (IBBI) invites suggestions/comments from public and regulated entities, on the Regulations for simplifying, easing and reducing cost of compliance. The suggestions are invited in pursuance of the announcement made in the Union Budget for FY 2023-24 by the Union Finance Minister: “To simplify, ease and reduce cost of compliance, financial sector regulators will be requested to carry out a comprehensive review of existing regulations. For th...
Govt considers giving financial creditor status to insurers issuing surety bond during resolution
To make surety bond business more attractive, the government is looking at making relevant changes in the Insolvency and Bankruptcy Code (IBC) to consider insurers as financial creditor in case of default of infra projects. The surety bond issued by a general insurance company is a three-party contract by which one party (the surety) guarantees the performance or obligations of a second party (the principal) to a third party (the obligee). The surety is a company that provides the fina...
The National Company Law Tribunal Delhi recently observed that the Insolvency and Bankruptcy Code cannot be used as a recovery tool. “We are of the view that in the present case the applicants are already having demands drafts of amount exceeding the defaulted amount in this petition and moreover IBC cannot be used as a tool for recovery; the settlement has been arrived between the parties. The amount has been paid in excess of the default amount and Ld. Counsel for the applicant has al...
India’s turbulent aviation sector will likely see another player go belly up with Go First of the Wadias filing for voluntary insolvency before the National Company Law Tribunal (NCLT). The budget carrier said it is cancelling all flights on May 3, 4, and 5 and will refund the full fares to the passengers. The Directorate General of Civil Aviation (DGCA) has questioned the cancellation and issued a show-cause to the airline. Go First has been asked to submit its response within 24 ho...
Comments