The government on Monday introduced in Parliament the ‘Insolvency and Bankruptcy Code, 2015’ that provides for resolution of insolvency in a time-bound manner.
The Bill aims at promoting investments, leading to higher economic growth.
It also provides for setting up of an ‘Insolvency and Bankruptcy Board of India’ to regulate professionals, agencies and information utilities engaged in resolution of insolvencies of companies, partnership firms and individuals.
“The Code also proposes to establish a fund to be called the Insolvency and Bankruptcy Fund of India...,” said the statement of objects and reasons of the Bill tabled in Lok Sabha by Finance Minister Arun Jaitley.
It further said that a new legislation was needed to deal with insolvency and bankruptcy as the existing framework is “inadequate, ineffective and results in undue delays in resolution“.
As per the proposed legislation, the corporate insolvency would have to be resolved within a period 180 days, extend able by a further 90 days. It also provides for fast-track resolution of corporate insolvency within 90 days.
Currently, there is no single law dealing with insolvency and bankruptcy. Liquidation of companies is handled by the High Courts; individual cases are dealt with under the Presidency Towns Insolvency Act, 1909 and Provincial Insolvency Act, 1920.
N.K. Premchandran (RSP) opposed the Bill at introduction stage itself saying it was a defective piece of legislation, but later the lower House through voice allowed its introduction.
