Parliament on Thursday passed amendments to the insolvency law that will help ring-fence successful bidders of insolvent companies from risk of criminal proceedings for offences committed by previous promoters.
The Insolvency and Bankruptcy Code (Amendment) Bill, 2020 was passed by voice vote in Rajya Sabha. It was approved by Lok Sabha on March 6.
The Bill replaces an ordinance.
Replying to a short debate on the Bill, Finance Minister Nirmala Sitharaman said amendments are sync with time and also adhere to a Supreme Court order in “letter and spirit.”
The Minister said need for amendment in the IBC arose because of “changing requirement” and “requirement of fine tuning” the law as several MPs wanted to know why the government was bringing in so many amendments to a new law.
Stressing that the government is “very responsive” and has been talking to the industry, she assured the House that amendments to the IBC are are not being “unthinkingly done.”
The IBC, which came into force in 2016, has already been amended thrice.
Ms. Sitharaman said the government was taking care of the interest of home buyers and the requirement of minimum number of home buyers in the IBC has been included to avoid “frivolous litigations.”
The Bill seeks to remove bottlenecks and streamline the corporate insolvency resolution process. It aims to provide protection to new owners of a loan defaulter company against prosecution for misdeeds of previous owners.
The latest changes pertain to various sections of the IBC as well as introduction of a new section.