President approves bankruptcy code ordinance : The Tribune India

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President approves bankruptcy code ordinance

NEW DELHI: The ordinance to amend the insolvency and bankruptcy code that will bar defaulters from bidding for the stressed assets has got the President’s approval.

President approves bankruptcy code ordinance

President Ram Nath Kovind on Thursday signed the ordinance that was sent to him by the Union Cabinet on Wednesday.



Sanjeev Sharma

Tribune News Service

New Delhi, November 23

The ordinance to amend the Insolvency and Bankruptcy Code, 2016, which will bar wilful defaulters from bidding for their own companies under bankruptcy proceedings, got the President’s approval on Thursday.

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The Ordinance aims to keep out 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.

Persons who will be ineligible to be a resolution applicant include wilful defaulters and those who have their accounts classified as non-performing assets for one year or more.

It also debars those who have executed an enforceable guarantee in favour of a creditor, in respect of a corporate debtor undergoing a corporate insolvency resolution process or liquidation process under the Code

Earlier, the regulations by the IBBI were also amended to ensure that information on the antecedent of the applicant submitting the resolution plan along with information on the preferential, undervalued or fraudulent transactions are placed before the Committee of Creditors in order for it to take an informed decision on the matter.

Along with other steps towards improving compliances, actions against defaulting companies to prevent misuse of corporate structures for diversion of funds, reforms in the banking sector, weeding out of unscrupulous elements from the resolution process is part of ongoing reforms of the Government, an official statement said.

These would help strengthen the formal economy and encourage honest businesses and budding entrepreneurs to work in a trustworthy, predictable regulatory environment, an official statement said.

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