Changes to insolvency law to be prospective, says Injeti Srinivas

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New Delhi | Published: April 5, 2018 3:56:53 AM

The changes to the Insolvency and Bankruptcy Code (IBC), proposed by a 14-member panel, will be applicable to bids for stressed assets only prospectively once they make it to rule books, corporate affairs secretary Injeti Srinivas said on Wednesday.

 insolvency law, Insolvency and Bankruptcy Code, IBC panel, economy, The changes to the Insolvency and Bankruptcy Code (IBC), proposed by a 14-member panel, will be applicable to bids for stressed assets only prospectively once they make it to rule books, corporate affairs secretary Injeti Srinivas said on Wednesday.

The changes to the Insolvency and Bankruptcy Code (IBC), proposed by a 14-member panel, will be applicable to bids for stressed assets only prospectively once they make it to rule books, corporate affairs secretary Injeti Srinivas said on Wednesday. He said any new law, based on the panel’s recommendations, won’t be applicable to cases where final resolution plans have been submitted. This means if a resolution plan for, say an Essar Steel, isn’t submitted by the time the new law comes into effect, bids and processes will have to be recalibrated  accordingly. Asked about Binani Cements, where the National Company Law Appellate Tribunal (NCLAT) has asked parties in dispute to amicably settle the conflict, Srinivas said the government doesn’t intend to interfere with the ongoing process where appropriate bodies are looking at a live case. The panel has suggested that a case admitted for resolution can be withdrawn (before the plan is approved) by the appellate body if 90% of creditors agree. In the case of Binani Cement, the promoter company, backed by Ultratech Cement, wanted termination of insolvency proceedings even though the Dalmia Bharat-led consortium was declared the highest bidder. Asked if an ordinance is being planned to implement the changes right away, Srinivas said if the government decides certain matters are so urgent that they require immediate intervention, it could always resort to the ordinance route. The secretary, however, added that he is not the competent authority to decide if an ordinance must be brought in to implement these changes.

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