The Parliament has passed the Insolvency and Bankruptcy Code (Amendment) Bill 2020. The upper house of the Parliament, the Rajya Sabha approved the bill on March 12, 2020. The Lok Sabha had approved the bill earlier.
The Union Cabinet chaired by Prime Minister Narendra Modi had approved the Insolvency and Bankruptcy Code (Second Amendment) Bill, 2019 on December 11, 2019. The bill proposes to make amendments in the Insolvency and Bankruptcy Code, 2016.
The second amendment bill seeks to amend sections 5(12), 5(15), 7, 11, 14, 16(1), 21(2), 23(1), 29A, 227, 239, 240 in the Insolvency and Bankruptcy Code, 2016 and insert new section 32A in the code.
The new amendments will remove the difficulties faced during insolvency resolution, to further ease doing of business.
The amendments aim to remove the bottlenecks in insolvency resolution, streamline Corporate Insolvency Resolution Process and protect last-mile funding to boost investment in the financially distressed sectors.
The amendments also introduce additional thresholds to prevent frivolous triggering of the Corporate Insolvency Resolution Process. They also ensure that the foundation of a corporate debtor’s business is not lost and it can continue as a going concern by clarifying that the concessions, licenses, permits and clearances could not be terminated or suspended and their renewal denied also cannot be denied during the moratorium period.
The amendments could also lead to “ring-fencing corporate debtor resolved under the IBC in favour of a successful resolution applicant from criminal proceedings against offences committed by previous management.
The Insolvency and Bankruptcy Code (Amendment) Bill, 2019 was passed by the Parliament on August 1, 2019 when it was passed in the Lok Sabha. The amendment bill, seeking amendments in the Insolvency and Bankruptcy Code, 2016, was passed earlier by the Rajya Sabha on July 29, 2019.