The Union Cabinet on Tuesday approved a proposal to promulgate an ordinance to amend the Insolvency and Bankruptcy Code (IBC) 2016.
The amendments will remove certain ambiguities in the IBC 2016 and ensure smooth implementation of the code, an official statement said.
The move is aimed at easing the insolvency resolution process and promoting the ease of doing business. Aimed at streamlining of the insolvency resolution process, the amendments seek to protect last-mile funding and boost investment in financially-distressed sectors.
Under the amendments, the liability of a corporate debtor for an offence committed before the corporate insolvency resolution process will cease.
The debtor will not be prosecuted for an offence from the date the resolution plan has been approved by the adjudicating authority, if a resolution plan results in change in the management or control of the corporate debtor to a person who was not a promoter or in the management or control of the corporate debtor or a related party of such a person.
The debtor will also not be prosecuted if a person with regard to whom the relevant investigating authority has on the basis of material in its possession reason to believe that he had abetted or conspired for the commission of the offence, and has submitted or filed a report or a complaint to the relevant statutory authority or court.
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Subject to relevant provisions, the corporate debtor will extend all assistance and cooperation to any authority investigating an offence committed prior to the commencement of the corporate insolvency resolution process.
The amendments are aimed at providing more protection to bidders participating in the recovery proceedings and in turn boosting investor confidence in the country's financial system.
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