India – Government Proposes Changes To The Insolvency And Bankruptcy Code For Time Bound Resolution Of Stressed Assets.

 

Summary:
 

Government has, vide a notification dated 23 December 2021, proposed amendments to the Insolvency and Bankruptcy Code, 2016 (Code) to facilitate a swift admission process, streamline provisions concerning avoidable transactions and wrongful trading, and promote timely approval of resolution plans. The major proposed amendments to the Code are:
 

(a) financial creditors would be allowed to submit only Information Utilities (IU) authenticated records to establish ‘default’ for the purposes of admission of their application seeking insolvency of corporate debtor. The NCLTs would also only consider IU authenticated records as evidence of ‘default’ of debt by the corporate debtor;
 

(b) Upon initiation of insolvency proceedings, when public announcement is made by the Resolution Professional calling for claims, financial creditors would be allowed to submit their claims along with records available with an IU only as a proof of existence of debt;
 

(c) The look-back period for avoidable transactions would be from the date of filing the petition seeking insolvency instead of the date of commencement of insolvency process;
 

(d) creditors (individually or in groups) or the committee of creditors would be allowed to apply to the NCLT for avoiding preferential or undervalued or extortionate transactions of the corporate debtor, if the resolution professional or liquidator fails to make such application to the NCLT;
 

(e) A fixed time-period of 30 (thirty) days would be provided for approval or rejection of a resolution plan by the NCLT. Where the resolution plan is not approved or rejected within this time-period, the NCLT would be required to record reasons in writing for the same; and
 

(f) Voluntary liquidation process may be closed by way of a special resolution and approval of creditors representing twothirds in value of the debt. If such approvals are made, the liquidator may be required to make a public announcement of the closure of the process and intimate concerned authorities.
 

For detailed article on the proposed amendments, click here.
 

 

For further information, please contact:  

Souvik Ganguly, Partner, Acuity Law