The Rajya Sabha on Friday passed the Insolvency and Bankruptcy Code (second amendment) Bill to accord homebuyers the status of financial creditors. The Bill, meant to replace an ordinance promulgated in June, has already been approved by the Lok Sabha. It will be made into law soon once it gets the Presidential approval. The Bill allows promoters of micro, small and medium enterprises, who are not wilful defaulters, to bid for their stressed companies and provides for withdrawal of a case after admission by the adjudicating authority if it is approved by 90% of creditors.
Speaking during the discussion on the Bill late on Friday, finance minister Piyush Goyal said the recovery from stressed assets in the 32 insolvency cases that have been resolved has been to the tune of 55%. The good thing is that what used to take 4.3 years earlier (for the resolution of one case) is now being done within a year under the IBC, he said.
Replying on stressed assets in the power sector, Goyal said the idea is to facilitate resolution of such projects and not liquidation.
The government is also trying to boost the number of benches, and staff strength of adjudicating authorities like the National Company Law Tribunal. It has also set up a panel to see if simple cases can be settled by imposing “non-discriminatory” penalty.
The idea is to expedite the resolution process of stressed assets and other cases before the NCLT.
The Bill also streamlines the ineligibility criteria under Section 29-A of the IBC by ensuring carve-outs for pure play financial entities like banks to enable more players to participate in bidding for stressed assets. These financial entities would be exempted from the disqualification provision on account of holding stake in or acquiring stressed firms earlier.