IBC (Amendment) Bill, 2020 passed by Parliament

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parliament passes ibc

The Rajya Sabha passed the Insolvency and Bankruptcy Code (Second Amendment) Bill, 2019, by voice vote. 

The Bill is aimed at easing the insolvency resolution process, the Bill was introduced in the house by Finance Minister Nirmala Sitharaman on December 12, last year. After having been scrutinized by the Standing Committee, whose report was received on March 4, the Bill was passed by the Lok Sabha last Friday, on March 6, amidst high tension in the house with the opposition MPs demanding immediate discussion on Delhi Riots. 

This is the 4th time that the IBC Code is proposed to be amended. As per the statement of Objects and Reasons annexed with the Bill, 

“A need was felt to give the highest priority in repayment to last mile funding to corporate debtors to prevent insolvency, in case the company goes into corporate insolvency resolution process or liquidation, to prevent potential abuse of the Code by certain classes of financial creditors, to provide immunity against prosecution of the corporate debtor and action against the property of the corporate debtor and the successful resolution applicant subject to fulfillment of certain conditions, and in order to fill the critical gaps in the corporate insolvency framework, it has become necessary to amend certain provisions of the Insolvency and Bankruptcy Code, 2016.”

Below mentioned are some of important features of this bill: –

  1. Insolvency commencement date 
  2. Threshold for initiating resolution process
  3. Corporate debtors entitled to make application
  4. Liabilities for prior offences 
  5. Licenses and permits not to be terminated due to insolvency