The Union Cabinet, chaired by Prime Minister Narendra Modi, on Tuesday agreed to promulgate an ordinance for further amending the Insolvency and Bankruptcy Code. The finance ministry, which is implementing the law, has been looking at ways to ease the insolvency resolution process as well as to promote ease of doing business.
The amendments seek to protect the bidders in IBC cases against the reopening of claims and threat to the assets acquired by them. The move is an attempt to make the resolution process more effective as well as to boost investor confidence in the country's financial system.
"The amendment will remove certain ambiguities in the Insolvency and Bankruptcy Code (IBC), 2016 and ensure smooth implementation of the code," said Union Minister Prakash Javadekar while briefing reporters after the Cabinet meeting.
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The amendments absolve a corporate debtor of liability for an offence committed before the commencement of the corporate insolvency resolution process. Besides, the corporate debtor will not be prosecuted for such an offence from the date the resolution plan has been approved by the adjudicating authority, if the resolution plan results in the change in the management or control of the corporate debtor to a person who was not a promoter or in the management or control of the corporate debtor or a related party of such a person.
The amendments also propose that the debtor will not be prosecuted if a person with regard to whom the relevant investigating authority has, on the basis of material in its possession, reason to believe that he had abetted or conspired for the commission of the offence, and has submitted a report or a complaint to the relevant statutory authority or court.
Subject to relevant provisions, the corporate debtor shall extend all assistance and cooperation to any authority investigating an offence committed prior to the commencement of the corporate insolvency resolution process.
In the recent past, several companies, including JSW Steel, Tata Steel, had put forth their grievances regarding issues that cropped up after the closure of the IBC process.
Edited by Chitranjan Kumar