New Delhi: Lok Sabha on Thursday passed the much awaited Insolvency and Bankruptcy Code Bill, which aims to speed up liquidation of ailing firms, improve the ease of doing business and attract more investment. Minister of State for Finance Jayant Sinha moved the crucial legislation to start the debate and it was passed in a voice vote.
Replying to the queries of lawmakers, Sinha said the proposed Bankruptcy Board will be manned by eminent professionals to ensure a transparent liquidation of ailing firms. India will also coordinate with other countries to cover foreign assets of industrialists filing for bankruptcy.
The Joint Parliamentary Committee has already given a green signal to the Bankruptcy Bill paving the way for its passage in this session. The committee has added some clauses that will widen the scope to foreign assets of ailing companies during bankruptcy procedures.
The Bankruptcy Code was introduced by Finance Minister Arun Jaitley in Lok Sabha on December 2015, and referred to the Joint Parliamentary Committee for further scrutiny.
The Code will help India Inc to exit an ailing business while banks stand to gain as they can recover their dues within a stipulated time.
The Code proposes setting up of a regulator–Insolvency and Bankruptcy Board of India–for regulation of insolvency professionals, agencies and information utilities, along with an Insolvency and Bankruptcy Fund.
The proposed legislation seeks to amend a plethora of laws including India Partnership Act of 1932, Central Excise Act of 1944, Customs Act of 1962, Income Tax Act of 1961, the Recovery of Debts due to Banks and Financial Institutions Act of 1993, SARFAESI Act of 2002, Sick Industrial Companies Repeal Act of 2003, Payment and Settlement Systems Act5 of 2007, Limited Liability Partnership Act of 2008 and Companies Act of 2013.
The existing framework for insolvency and bankruptcy is inadequate, ineffective and results in undue delays in resolution.
The Code will provide designate National Companies Law Tribunal (NCLT) and Debt Recovery Tribunals (DRTs) as adjudicating authorities for resolution of insolvency, liquidation and bankruptcy.