To make the corporate reconciliation process attractive and easy, the government is preparing to change the Insolvency and Lending Disability Act (IBC). Under this, the company which is buying the assets endangered in the auction can get an exemption from the financial offenses going on on its former promoters. Sources close to the case say that this change will make the insolvency resolution process more attractive to the bidding companies. At the same time, they will build trust to buy the property in distress. The government can introduce a bill to amend the provisions of IBC 2016 only in the current cold session of Parliament. It is being told that a number of companies bidding for properties auctioned through IBC had raised concerns over the former promoters being implicated in ongoing affairs. For this reason, many companies also decide to withdraw from the auction process and the success of the corporate solution process is hampered.
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Cases like Bhushan Steel will not repeat
An IBC official said that most of the cases related to the resolution process are under investigation. We are working on an arrangement whereby the buyer of a company that is caught in the legal process due to prior management can be exempted from litigation so that cases like Bhushan Power and Steel (BPSL) do not recur. It is being told that BPSL, which was auctioned through IBC, was to be acquired by JSW Steel. Earlier last month, the Enforcement Directorate seized the Odisha-based company's 4,000-crore plant and machinery and delayed the resolution process. At present, after the intervention of NCLAT, the Corporate Ministry clarified that no government agency can seize assets while the IBC process continues.
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Bankruptcy law strengthened by the Supreme Court verdict: Sahu
The chief of the Lending and Insolvency Code Board (IBBI) MS Sahu said on Sunday that the law was further strengthened by the decision of the apex court in the Essar Steel case. This will put a check on those parties that work to disrupt the resolution process. He said that the decision of the Supreme Court has not only cleared the way for the recovery of Rs 42,000 crore from Essar Steel but also cleared the role of solution professional, solution applicant, creditors' committee, tribunal and appellate tribunal.
