Amendments to the Insolvency and Bankruptcy Code, which are proposed to be prospective and relevant only to fresh cases, will also apply in instances of rebidding once the changes take effect.
“If the character of the bid has changed, then it is a new bid and the new rules will apply,” Injeti Srinivas, secretary in the Ministry of Corporate Affairs, said on Wednesday.
The government has no intention of interfering in ongoing cases being scrutinised by committees of creditors, Srinivas said at the venue of a conference on insolvency law organised by the Confederation of Indian Industry.
“We have to respond to the emerging challenges. The ultimate objective is to rescue the company while maintaining the sanctity of the framework,” he added. Srinivas said the government is considering increasing the minimum benchmark for individual insolvency to Rs 10,000 from Rs 1,000. “The number of cases can become enormous since even a crop loan would qualify as individual insolvency,” he said. The government is yet to notify the rules for individual insolvency.
The 14-member insolvency law committee headed by Srinivas has made public its recommendations for amendments to the IBC. The ministry has sent the draft bill of amendments to the law ministry.
On whether the government will promulgate an ordinance to introduce the changes, Srinivas said, “The call for ordinance will have to be taken by the competent body. The government will have to take a call on how many of these are necessary.”
The MCA secretary said the big 12 cases referred by the Reserve Bank of India for insolvency have proceeded well. He said there had been a fear that bid values would go down once a promoter was barred, but that has not been the case.
“The 270-day deadline has not been breached. Many cases have come to successful fruition,” he said. Of the total Rs 9 lakh crore worth of bad loans, almost Rs 4 lakh crore has come back into the system.
To step up the disposal of cases, the government will double the strength of the National Company Law Tribunal. During the past one and a half years, NCLT has disposed of 16,000 cases.
Source: Economic Times