President approves bankruptcy code ordinance

President Ram NathKovind on Thursday signed the ordinance that amends the Insolvency and Banking Code (IBC) 2016 which was sent to him by the Union Cabinet on Wednesday.

IANS
New Delhi, Publish Date: Nov 24 2017 1:18AM | Updated Date: Nov 24 2017 1:18AM
President approves bankruptcy code ordinance

An ordinance that bars wilful and habitual defaulters from bidding for stressed assets was promulgated on Thursday with tough provisions to prevent any attempts by them to regain control of companies in difficulty.

President Ram NathKovind on Thursday signed the ordinance that amends the Insolvency and Banking Code (IBC) 2016 which was sent to him by the Union Cabinet on Wednesday. 

Breaking the news at a meeting of select editors, Finance Minister ArunJaitley said: "The ordinance disentitles the big defaulters and makes it difficult for them to bid for distressed assets which was of their own making."

He said the ordinance does not ban them from bidding for the stressed assets but would make it difficult for them and disentitles them from doing it.

Giving an example he said: "You can't say my account is NPA (non performing asset) but I have to bid. This is ethically completely unacceptable to the Indian political system.

"I also have a political cost to pay. You can't be a stressed asset and you want to join the process for bidding." 

He said one solution could be that the NPA holder at least comes forward and services the interest by Rs 10 to Rs 15 -thousand crore in an asset of, say, Rs one lakh crore.

The Ordinance aims at putting in place safeguards to prevent unscrupulous, undesirable persons from misusing or vitiating the provisions of the Code.

The amendments aim to keep-out such persons who have wilfully defaulted, are associated with non-performing assets, or are habitually non-compliant and, therefore, are likely to be a risk to successful resolution of insolvency of a company. 

In addition to putting in place restrictions for such persons to participate in the resolution or liquidation process, the Amendment also provides such check by specifying that the Committee of Creditors ensure the viability and feasibility of the resolution plan before approving it. The Insolvency and Bankruptcy Board of India (IBBI) has also been given additional powers. IANS

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