On Thursday the parliament passed the Insolvency and Bankruptcy Code (Amendment) Bill 2019. The Bill brought in eight amendments to ensure the code is dynamic and not prone to interpretative uncertainties. The amendment bill was passed after a three-hour-long discussion by the Lok sabha, wherein it debated on all aspects of the amendment. This will be the third amendment to the code since it was brought into force in 2016.
The Bill seeks to ensure the timely admission of insolvency cases and their completion within the newly set deadline of 330 days (previously 270 days). The resolution plan as per the corporate insolvency resolution process will be binding on the State, local authorities and the Centre as well.
Throwing light on the large pendency before the NCLT, the finance minister said the almost 73% of the cases awaiting resolutions are from the BIFR and not a recent occurring. She talked about the steps the government has taken steps to augment the capacity of National Company Law Tribunal (NCLT). In a recent amendment to the Company law act, the number of benches has been increased from 10 to 15. Furthermore, with the addition of 26 new members, the total strength has been moved to 52.
Sitharaman clarified that the IBC was not looking to force companies into liquidation, but will be focused on their revival and continuation. While addressing the parliament, she made it clear that if there existed a chance for a companies revival, it should be pursued.
Commenting on the Jet Airway issue, Sitharaman stated that IBC is optional and that the stakeholders may work out their own resolution. She also disclosed that while the NCLT has refused to admit Jet Airways bankruptcy plea, the Netherlands had accepted it.
Among other changes, the government will now consider introducing a ‘cross-border insolvency’ model, based closely on the recommended UNCITRAL model.
The finance minister in her address stated that the government wished that the entire Corporate Insolvency Resolution Process (CIRP) was to be completed within the newly set deadline of 330 days. It should include the litigation and the judicial process too.
Talking about the delays, she announced that there were 335 cases wherein the resolution has been pending for over 330 days, 221 cases where the resolution is pending between 180-270 days. More than 475 cases have been pushed for liquidation.