The amendments seek to remove bottlenecks and streamline the corporate insolvency resolution process, wherein successful bidders will be ring-fenced from any risk of criminal proceedings for offences committed by previous promoters of companies concerned.
Union Finance Minister Nirmala Sitharaman introduced a bill in the Lok Sabha on Thursday to amend the Insolvency and Bankruptcy Code amid protests from the Opposition that demanded the bill to be referred to a standing committee for scrutiny. The amendments seek to remove bottlenecks and streamline the corporate insolvency resolution process, wherein successful bidders will be ring-fenced from any risk of criminal proceedings for offences committed by previous promoters of companies concerned.
The Insolvency and Bankruptcy Code (IBC), which came into force in 2016, has already been amended thrice. The latest changes pertain to various sections as well as introduction of a new section. Explaining the rationale, Sitharaman said the amendment has been necessitated because there was lot of doubt in the mind of small home buyers and others. “Some amendments were required in addition to what we did in July. Therefore, we have come back,” she said.
Acknowledging that a two-day mandatory notice had not been given in this case, Sitharaman said: “It is in response to development which we see in the economy…. Please do helps us to respond to the economy as all of us are equally concerned.” Opposing the introduction of the bill without following the mandatory two-day notice, Congress leader Adhir Chowdhury said one after another amendment was brought in the IBC and it implied “inconsistency” of the government in managing the economy.
He also pointed to the rule that no bill could be introduced until copies were made available two days in advance. The bill was circulated among the members in the morning, Chowdhury said, adding, the objection was that the ministry had been taking the entire Parliament for a ride . He requested the Speaker to send the Bill to a parliamentary standing committee, which was supported by Saugata Roy of the TMC.
Amidst the war of words, the Speaker intervened and said he had allowed the minister to introduce the Bill due to paucity of time. The IBC (Second Amendment) Bill, 2019 was approved by the Union Cabinet on Wednesday. The first amendment was passed by Parliament in July. As per the statement of objects and reasons of the bill, it seeks to amend Section 7 of the IBC to insert certain provisions specifying a minimum threshold for certain classes of financial creditors for initiating insolvency resolution process.
It also seeks to amend section 227 of the Code so as to clarify that the insolvency and liquidation proceedings for financial service providers may be conducted with such modifications and in such manner as may be prescribed.
In addition, five other amendments were moved through the bill for further strengthening insolvency process. These amendments are aimed at removing certain difficulties being faced during insolvency resolution process to realise the objectives of the code and to further ease doing of business.