The Union Cabinet on 22nd
Nov 2017 approved a proposal to promulgate an Ordinance to amend the Insolvency and Bankruptcy Code (IBC).
Official sources said the move is to strengthen the IBC by explicitly preventing certain persons - including wilful defaulters, disqualified directors, those who have indulged in fraudulent transactions.
It also includes promoters whose account is classified as non-performing assets (NPA) beyond a prescribed duration - from regaining control of the defaulting company through the backdoor in the garb of a resolution applicant.
The IBC provides for an effective and robust legal framework for time-bound insolvency resolution to release assets locked up in NPA and promote maximisation of value of assets, failing which, under-utilised resources of unviable business are released through liquidation.
These amendments have been proposed because in the initial phase of the Corporate Insolvency Resolution Process (CIRP) under the IBC, a number of cases are likely to have long pending default requiring deep haircut for the creditors, the sources said.
The ordinance is likely to be tabled during the winter session of Parliament with a view to get its nod soon.