Amendments to bankruptcy code tabled in Lok Sabha

The insolvency and bankruptcy code (amendment) bill 2017 replaces an ordinance that was brought in to plug in loopholes.

The government on Thursday introduced a bill in the Lok Sabha to bring in amendments to the insolvency and bankruptcy code to make the resolution process for ailing firms more effective.

Union Finance Minister Arun Jaitley after the BJP Parliamentary Party meeting, during the on-going Winter Session of Parliament at Parliament Library in New Delhi, India, on Thursday, December 28, 2017. (Arvind Yadav/ Hindustan Times)

The bill, introduced by finance minister Arun Jaitley, allows a defaulting promoter to take part in the resolution process by giving him time of upto a month to repay the overdue amount.

Further, it has allowed asset reconstruction companies, alternate investment funds and banks to participate in the bidding process by providing an exception to these entities of being classified under definitions of holding companies, associate or subsidiary companies under the code.

The insolvency and bankruptcy code (amendment) bill 2017 replaces an ordinance that was brought in to plug in loopholes in the laws that may have permitted wilful defaulters from participating in the resolution or liquidation process of their company and regain control.

The amendment bill has addressed concerns about some of the stringent provisions in the ordinance that investors felt could have made the resolution process a non-starter.

The insolvency and bankruptcy code was enacted in 2016 to find a time-bound resolution for ailing and sick firms, either through closure or revival, while protecting interests of creditors.