IBC Amendment Bill was passed in Rajya Sabha on March 12 and by Lok Sabha on March 6. The new law will provide protection to new owners of a loan defaulter company against prosecution for wrongdoings of past owners. The amendment makes compulsory a minimum threshold for homebuyers to initiate insolvency and provide immunity to a corporate debtor from past liabilities once it’s acquired.
The government had brought in an ordinance in December 2019 to make necessary changes. In January 2020, the Supreme Court had ordered status quo on the provisions that restricted power. The Bill amends the Code the effect that a licence, permit, registration, quota, concession, clearances or a similar grant or right will now not be terminated during the moratorium period.
The government is both responsive and is committed to delivering its promises in tune with changing times. – Nirmala Sitharaman, Finance Minister
Congress MP Jairam Ramesh suggested the government to revisit the Insolvency and Bankruptcy Code w.r.t MSME sector to protect their interests. He also highlighted that under the present law, the recovery rate is only 10%. Answering doubts over MSME, the Finance Minister said, “the banks have been asked to pay dues to stakeholders in order to maintain the liquidity.”
Trinamool Congress MP Manas Ranjan Bhunia said, since the passing of the bill in 2016, the government has introduced three ordinances and four amendments for rectification, which shows a lack of knowledge and confusion of the government.”
The statistics suggest that as of 1st January 2020, nearly 15 thousand cases were resolved based on Insolvency and Bankruptcy Code out of around 43 thousand cases.