Standing Committee on Finance (2019-2020) prsented the Sixth Report on Insolvency and Bankruptcy (Second Amendment) Bill, 2019 in Lok Sabha on 04-03-2020.
Insolvency and Bankruptcy Code was enacted on May 28, 2016, to consolidate and amend the laws relating to reorganization and insolvency resolution of corporate persons, partnership firms and individuals in a time bound manner for maximization of value of assets of such persons, to promote entrepreneurship, availability of credit and balance the interests of all the stakeholders including alteration in the order of priority of payment of the Government dues.
1.2 The Code envisages a sound insolvency regime for companies and Limited Liability Partnerships as well as for individuals and unlimited liability partnership under its different parts. The ecosystem for implementation of the provisions of the Code consists of four pillars, viz., the Adjudicating Authorities (the National Company Law Tribunals and Debts Recovery Tribunals), Insolvency Professional Agencies, Insolvency Professionals and Information Utilities, and the Insolvency and Bankruptcy Board of India (IBBI) to exercise regulatory oversight over insolvency professional agencies, insolvency professionals and information utilities.
1.3 Insolvency and Bankruptcy Code is a new legislation which is still evolving. As and when problems arise in smooth functioning of the Code necessary steps have been taken to resolve them including amendments to the Code as required to attain the objectives of the Code. Till date, the Code has been amended four times.
2.6 While acknowledging the role played by IBC in arresting the growth of NPAs, it is expected that effective measures within the ambit of IBC would be taken to realize better results from the process. The Committee note that out of claims of around Rs 8.4 lakh crore, the realizable amount is around Rs. 3.57 lakh crore i.e. around 43% from the IBC process so far. Also, the average time taken for resolution has come down to 394 days. The Committee hope that the recovery percentage increases significantly in the near future and the time taken for resolution conforms to the timeline prescribed in the Code. The Committee would like to reiterate its recommendation made in previous reports about increasing the number of benches in National Company Law Tribunal (NCLT) and establishing e-courts for faster disposal of cases and speedy resolution. The Committee understand that a draft Bill on Cross Border Insolvency is in the pipeline. These types of cases have already resulted in uncertain recoveries for creditors. The Committee would like this Bill to be introduced in Parliament as soon as possible in order to further strengthen the insolvency framework.
To read the detailed report, please follow the link: Standing Committee Report on Insolvency and Bankruptcy (Second Amendment) Bill, 2019