Panel seeks more amendments to Insolvency and Bankruptcy Code

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Mains Paper 2: Governance | Government policies and interventions for development in various sectors and issues arising out of their design and implementation.

From UPSC perspective, the following things are important:

Prelims level: Particulars of the IBC.

Mains level: Recommendations by the Insolvency Law Committee.


News

Recommendations for the Insolvency and Bankruptcy Code (IBC) 

  1. The insolvency law committee has recommended that the Insolvency and Bankruptcy Code (IBC) be amended
  2. Why: to make eligibility requirements for bidders stricter and give lenders more flexibility in decision-making, said two people aware of the developments
  3. These recommendations given below, require parliamentary approval to come into effect

Recommendations

  1. The panel has recommended amendments to Section 29A of the IBC, which bars wilful defaulters, those with non-performing assets for over a year and people connected to these parties from bidding for stressed assets
  2. The panel has suggested a change in the definition of connected party to include a person who along with a resolution applicant picks up an equity stake in the company facing insolvency
  3. The panel has also recommended allowing promoters of medium, small and micro enterprises to submit resolution plans, provided they are not classified as wilful defaulters
  4. The other recommendation is to bring homebuyers on a par with unsecured financial creditors, giving them a greater say in insolvency proceedings

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Insolvency and Bankruptcy Code