Stressed asset buyers get protection after Cabinet clears IBC amendment

Cabinet clears Code amendments to shield new owners from criminal liabilities

In a move that will remove the final hurdle for companies taking over stressed firms, the Union Cabinet on Wednesday approved an amendment to the Insolvency and Bankruptcy Code (IBC) that prohibits attaching assets of companies resolved under the mechanism for offences committed by the previous management or promoters.

The decision assumes significance as there have been instances of enforcement agencies taking action against companies whose resolution process has already been completed. The government had received several representations from companies such as JSW Steel and Tata Steel on issues that cropped up after the closure of the IBC process.

“This is long-awaited