The Rajya Sabha has passed the Insolvency and Bankruptcy Code (Amendment) Bill, 2019.
The Bill amends the Insolvency and Bankruptcy Code,2016.The Code provides a time-bound process for resolving insolvency in companies and among individuals.Insolvency is a situation where individuals or companies are unable to repay their outstanding debt.
The bill provides that the resolution process has to be completed within 330 days including litigations and other judicial process.Presently,the resolution plan for an insolvent company has to be cleared within 270 days.
The bill also mandates that the bankruptcy resolution or liquidation decided under the bankruptcy framework is binding on central,state and local governments to whom the insolvent company owes dues.
The bill has also proposed to rework voting rights in the case of companies where there are a large number of creditors such as homebuyers and bondholders.
According to the new formula,if more than half of these creditors who are present approve a plan,it will be considered that the entire class of creditors has approved it.