Cabinet approves Insolvency and Bankruptcy Code (Second Amendment) Bill, 2019

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News:The Union Cabinet has approved the amendments in the Insolvency and Bankruptcy Code, 2016 through the Insolvency and Bankruptcy Code (Second Amendment) Bill,2019.

Facts:

About Insolvency and Bankruptcy Code (Second Amendment) Bill, 2019.  

  • The amendments aim to remove certain difficulties being faced during insolvency resolution process to realise the objects of the code and to further ease doing of business.

Key features of the bill:

  • The amendment includes a provision to protect the successful resolution applicants from criminal proceedings with regard to offences committed by previous promoters of a company.
  • It also removes bottlenecks, streamline Corporate Insolvency Resolution Process(CIRP) and protect last mile funding in order to boost investment in financially distressed sectors of the country.
  • The bill also introduces additional thresholds for Financial Creditors represented by an authorized representative due to large numbers in order to prevent frivolous triggering of Corporate Insolvency Resolution Process(CIRP).
  • The amended Act would also ensure that the substratum of the business of a corporate debtor is not lost.It can continue as a going concern by clarifying that the licences, permits, concessions, clearances cannot be terminated or suspended or not renewed during the moratorium period.

Additional information:

About Insolvency and Bankruptcy Code,2016(IBC):

  • The Insolvency and Bankruptcy Code,2016(IBC) is the bankruptcy law of India that administers the insolvency proceedings and establishes a framework for insolvency resolution processes effectively.
  • The Code outlines separate insolvency resolution processes for individuals and companies.It acts as a regulator by establishing the Insolvency and Bankruptcy Board of India.
  • The board oversees the insolvency proceedings in the country and regulates the entities registered below it.The Board has 10 members, which includes representatives from the Ministries of Finance and Law, and the Reserve Bank of India.
  • The Code creates time-bound processes for insolvency resolution of companies and individuals.These processes should be completed within 180 (extended to 330) days.
  • The resolution processes has to be conducted by licensed insolvency professionals (IPs).These IPs are members of insolvency professional agencies (IPAs).
  • Information utilities (IUs) are also established to collect,collate and disseminate financial information to facilitate insolvency resolution.
  • The National Company Law Tribunal (NCLT) adjudicates insolvency resolution for companies.The Debt Recovery Tribunal (DRT) are adjudicates insolvency resolution for individuals.