The Union Cabinet has approved the Insolvency and Bankruptcy Code (Amendment) Bill,2019.
The bill places greater emphasis on time-bound resolution and laying down voting rules of the financial creditors.
The amendment provides that the resolution process has to be completed within 330 days including litigations and other judicial process.Presently,the resolution plan for an insolvent company has to be cleared within 270 days.
The amendment also mandates that the bankruptcy resolution or liquidation decided under the bankruptcy framework is binding on central,state and local governments to whom the insolvent company owes dues.
The amendments proposed to rework voting rights in the case of companies where there are a large number of creditors such as homebuyers and bondholders.
According to the new formula,if more than half of these creditors who are present approve a plan,it will be considered that the entire class of creditors has approved it.
The Insolvency and Bankruptcy Code(IBC) was enacted in 2016 to facilitate a time-bound resolution for ailing and sick firms.It could either be through closure or revival,while protecting the interests of creditors.