Lok Sabha passes Insolvency and Bankruptcy Code Amendment Bill, 2021

The Insolvency and Bankruptcy Code (A) Bill, 2021 has been cleared amid Opposition clamour in the Lok Sabha. Due to the opposition's ruckus, the Parliament has been adjourned till 3pm.

Union Corporate Affairs Minister Nirmala Sitharaman tabled the bill in the Lok Sabha to replace an ordinance that amended the insolvency law.

This ordinance was announced on April 4 wherein a pre-packaged resolution process for stressed micro, small and medium enterprises (MSMEs) was introduced under this code.

As per these amendments, the government has notified the threshold of a default not exceeding Rs 1 crore for initiation of a pre-packaged resolution process. Under a pre-packaged process, main stakeholders (creditors and shareholders) come together to identify a potential buyer and negotiate a resolution plan before going to the National Company Law Tribunal (NCLT), which approves all the resolution plans under IBC.

Meanwhile, the government said that initiating reforms like IBC has helped banks recover bad debt worth around 5.5 lakh crore. Out of this, close to Rs 1 lakh crore was recovered from accounts that were written off such as Kingfisher. Rs 99,996 crore was recovered from loan accounts including Bhushan Steel, Bhushan Power & Steel, and Essar Steel through the IBC process.

Edited by Mehak Agarwal; with agency inputs

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Also read: Rs 5.5 lakh cr of bad debt recovered through reforms such as IBC: Govt