President consents, Centre to come out with ordinance to tighten insolvency law
President Ram Nath Kovind on Thursday approved the ordinance for amending the bankruptcy code, which will make it difficult for insolvent promoters to acquire stressed companies.
The came a day after Cabinet approved bringing in an ordinance to make "some changes" in the Code and reffered it the President for his assent.
The government will come out with an ordinance to make certain amendments to the Insolvency and Bankruptcy Code to prevent wilful defaulters from bidding for stressed assets that they previously owned.
The Code, which became operational in December last year, provides for a market-determined and time-bound insolvency resolution process. It is implemented by the corporate affairs ministry.
Under current law, wilful defaulters are classified as firms or individuals who own large businesses and deliberately avoid repayments. It also provides a market-determined and time-bound insolvency resolution process.
The finance ministry has already asked banks to ensure that wilful defaulters are prevented from buying back assets.
The move also comes at a time when there are concerns in certain quarters about various aspects of the law, including the possibility of promoters wresting back control of a company under the insolvency process.
The ministry has already set up a 14-member committee to identify and suggest ways to address issues faced in implementation of the law.
The Insolvency Law Committee, chaired by Corporate Affairs Secretary Injeti Srinivas, will take stock of the implementation of the Code.
More than 300 cases have been admitted for resolution under the Code by the National Company Law Tribunal (NCLT).
OneIndia News (with agency inputs)