Lok Sabha passes Insolvency and Bankruptcy Code Amendment Bill, 2021

New Delhi, July 29: The Lower House of the Parliament has passed the Insolvency and Bankruptcy Code (Amendment) Bill 2021. The Bill aimed to amend some of the provisions of the Insolvency and Bankruptcy Code (IBC), 2016.

 

 

 

Union Corporate Affairs Minister Nirmala Sitharaman tabled the bill in the Lok Sabha amid ruckus by the Opposition. The bill will replace the Insolvency and Bankruptcy Code (Amendment) Ordinance, 2021, which was promulgated on April 4, 2021.

 

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.

 

The government said it will ensure "quicker, cost-effective and value maximising outcomes for all the stakeholders, in a manner which is least disruptive to the continuity of their businesses which preserves jobs". The amendment was necessitated by the Covid-19 pandemic as it took a toll on the crucial MSME sector, a key contributor to the economy and provider of jobs.

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