IBC amendments to be pursued by new govt after Lok Sabha elections

Amendments to the Insolvency and Bankruptcy Code (IBC) will now be pursued by the new government after the general elections, according to an official in the Ministry of Finance.

The list of amendments proposed includes ‘pre-packaged’ insolvency for larger firms in the future and a separate framework for real estate insolvency. A total of six amendments have been made to the IBC since its inception in 2016 to enhance its efficiency.

"We have not been able to take it to the Cabinet yet. Since the elections code of conduct is expected to come into effect by mid-March, the plan will now be taken up only after the Lok Sabha elections”, the official added.

Among other changes suggested by the Ministry of Corporate Affairs (MCA) in its discussion paper are proposals to grant greater authority to the adjudicating authority and mandate the admission of insolvency applications filed by financial creditors.

According to officials, various consultations took place, and inter-ministerial discussions concluded in January, covering a range of topics from the consultation paper, including cross-border insolvency, group insolvency, and faster, smoother resolution.

Some of the suggestions made were also aimed at strengthening the powers of the committee of creditors or financial creditors to maintain transparency and expedite proceedings.

The MCA is also aiming to introduce an integrated portal in the form of a single platform to facilitate the seamless flow of information on cases.

As per the official, the information will not be open to the public but will provide resolution professionals with access to MCA data about the company's insolvency process. The Company Law Committee will submit a report by the end of March on this portal, and if approved, it could be operational from July 2024.