Amendments may be made to the insolvency law based on recommendations received from the panel currently reviewing issues surrounding the legislation, according to a senior government official.
Corporate Affairs Secretary Injeti Srinivas noted that while the provisions of the Insolvency and Bankruptcy Code (IBC) are all time-bound, the issue remains on how the interests of stakeholders are to be balanced.
A 14-member panel, chaired by Srinivas, is looking to identify and recommend solutions to tackle the issues being faced in the implementation of the IBC which came into effect in December 2016.
In the year since its launch, a large number of cases have been filed under the IBC that offers a market-determined and time-bound insolvency resolution process.
Srinivas noted that despite it being only a one-year old law, there was a need to have “a comprehensive stock-taking” of the law .
The Parliament recently cleared amendments to the IBC under which unscrupulous persons are prevented from misusing the law. Under this among others wilful defaulters and those whose accounts have been classified as non-performing assets will no longer be allowed to bid for stressed assets under the IBC.
Law Favours Some Stakeholders
Srinivas highlighted that there currently a perception that the law is a “little too skewed” in favour of financial creditors. Additionally, it is felt that it is not addressing the needs or expectations of other stakeholders.
Calling it a “serious area”, Srinivas said that the committee was examining it. He added that other areas like competition, regulatory clearances, tax liabilities would also be studied.
Srinivas also observed there were additional apprehensions of whether the law can be abused and utilize the law for “some sort of wrongful intent” .
Some of issues that Srinivas mentioned are being studied include :
- Whether the insolvency process must be governed by liquidation value or if the enterprise value must also be conserved .
- What are the rights of home buyers?
- What is the capacity of insolvency professionals?
Home Buyers’ Rights To Addressed
The question of the rights of home buyers has come to the fore as a result of the several incomplete realty projects and the consequent hardships faced by the buyers.
With some real estate firms currently facing insolvency proceedings, there have been suggestions for the inclusion of provisions for providing relief to home buyers.
In this regard, Srinivas said that whatever is done must be “calibrated” such that “public interest is not affected. “
The panel comprises several members such as Insolvency and Bankruptcy Board of India (IBBI) Chairperson M S Sahoo, former Lok Sabha Secretary General T K Viswanathan, RBI Executive Director Sudarshan Sen, Edelweiss Group Chairman and CEO Rashesh Shah, and Xpro India Chairman Sidharth Birla.
