The Parliament on Thursday passed the Insolvency and Bankruptcy Code (Amendment) Bill, 2019 that provides a 330-day timeline for insolvency resolution process and specifies minimum payouts to operational creditors in any resolution plan.
The Lok Sabha passed the bill on Thursday which was earlier passed by the Rajya Sabha.
Replying to the debate on the bill, Finance Minister Nirmala Sitharaman said the bill takes care of interests of homebuyers.
She referred to the death of Cafe Coffee Day founder-owner V G Siddhartha in mysterious circumstances and said the role that the IBC code will play in terms of resolution will need combined efforts of all members.
"Business failure should not be looked down upon, should not be seen as a curse," she said.
The minister said that letter and spirit behind IBC was to keep the companies "a going concern" and mergers, demergers and amalgamations were among means for achieving it rather than blindly going into liquidation.
Referring to a large number of litigations, she said 70 percent had been inherited from the Board for Industrial and Financial Reconstruction (BIFR).
She said the government has increased the number of members of National Company Law Tribunal (NCLT) and the strength now was 52.
The minister said that apart from physical infrastructure, attention is also being paid at capacity building.
Responding to a question about Jet Airways, she said the concerned stakeholders were not obliged to use IBC.
Referring to problems of home buyers related to Jaypee Infratech, she said the government was also seized of the matter.
"The bill strengthens interests of homebuyers," she said.
She said that as many as 6,079 cases had been disposed of even before admission under IBC.
Earlier, moving the bill for passage in the House, Sitharaman said the amendments were aimed at removing interpretative ambiguity and making the code vibrant.
The Bill seeks to amend the Insolvency and Bankruptcy Code, 2016. Sitharaman said the amendments will bring greater clarity to mergers, demergers, and amalgamations as part of the resolution process. She said it lays greater emphasis on time-bound disposal at the application stage itself.
While the code says that NCLT must determine the existence of default within 14 days of receiving a resolution application and may accept or reject it, the Bill states that the NCLT must record its reasons in writing if it has not passed an order within 14 days.
The Bill provides that the resolution process must be completed within 330 days including time for any extension granted and for legal proceedings.
It also specifies the manner in which the representative of a group of financial creditors should vote.
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