Bill replacing IBC ordinance to allow promoters of insolvent companies more time to repay dues

The government will give promoters of insolvent companies more time to repay their dues and participate in the resolution process of bankrupt companies in the Bill that will replace the ordinance that was promulgated last month to amend the Insolvency and Bankruptcy Code (IBC), ET has learnt. The changes proposed in the Bill will also clearly allow asset reconstruction companies, banks and alternative investment funds (AIFs) to participate in bidding and clarify the status of guarantors of such companies.

Entities that submitted a resolution plan but were subsequently rendered ineligible by the NPA clause of the ordinance will get an opportunity to make themselves eligible to participate, said people with knowledge of the matter. 

The ordinance bars a person with a non-performing account of more than a year who had not cleared the overdue amount, interest and other charges before the submission of a resolution plan from taking part in the process. The Bill is expected to clearly provide that such a defaulter will be eligible to submit a resolution plan if he clears dues before submitting a resolution plan. 

The Bill, which is expected to be introduced in Parliament soon, seeks to ease some norms and iron out some of the drafting ambiguities in the ordinance. #casansaar (Source - Econmic Times)