The Centre is planning sweeping changes to the Insolvency and Bankruptcy Code (IBC). CNBC-TV18 learns that the process could be split into two parts to ensure quicker resolution and fewer litigations.
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Sources told CNBC-TV18 that the government may separate the bid approval part from the distribution of money. The government expects the adjudicating authorities to give a quicker approval to bids once they come in from the Committee of Creditors (CoC). The move will ensure that the new promoter comes into the picture immediately and not wait for the distribution of money to start.
Also Read: Government mulling wide ranging amendments to bankruptcy law to maximise value and reduce delays
According to the government, the undisputed money can be given out to stakeholders in the first stage, while the disputed part of the money can be kept separately in an escrow account till the litigation gets over.
Sources told CNBC-TV18 that the government is also considering introducing a challenge mechanism into the IBC to cut delays and maximise the value of potential bids.
The government may also clarify on immunity given to new promoters as some courts have allowed fresh proceedings after resolution.
Currently, new promoters are exempt from fresh tax demands or legal proceedings arising pre-IBC.
