Rajya Sabha OKs bankruptcy bill; Nirmala Sitharaman says it clears grey areas

NEW DELHI: The Insolvency and Bankruptcy Code (Amendment) Bill 2019 was Monday approved by Rajya Sabha with finance minister Nirmala Sitharaman saying the proposed amendments are aimed at ensuring greater clarity in the debt resolution process. The finance minister said the bill had been brought to remove grey areas.
"There is a fear that probably the original intent with which this Parliament brought Insolvency and Bankruptcy Code is probably getting diluted. We should not allow its dilution just for want of clarity," she said while moving the bill.
The amendments, as has been reported, give Committee of Creditors of a loan defaulting company explicit authority over the distribution of proceeds in the resolution process and fix a firm time-line of 330 days for resolving cases referred to the IBC.
The National Company Law Appellate Tribunal had recently ruled in the Essar Steel Ltd's case that the Committee of Creditors had no role in distribution of claims and brought lenders (financial creditors) and vendors (operational creditors) on par.
The amendment now equates distribution of amounts under a resolution plan with the manner it's allowed in case of liquidation, maintaining the hierarchy of lenders. The change will be retrospective, making it applicable for ongoing cases.
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References

1. ^{^} Insolvency and Bankruptcy Code (timesofindia.indiatimes.com)
2. ^{^} Rajya Sabha (timesofindia.indiatimes.com)
3. ^{^} Nirmala Sitharaman (timesofindia.indiatimes.com)
4. ^{^} liquidation (timesofindia.indiatimes.com)

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