Lok Sabha on Thursday passed amendments to the Insolvency and Bankruptcy Code, with the government asserting that the spirit behind the law is not to allow companies to die.
The bill proposes a 330-day deadline for resolution including litigations. Shardul Shroff, the executive chairman of the law firm Shardul Amarchand Mangaldas and RK Bansal, MD of Edelweiss ARC, discussed the bill at length.
“I think IBC amendments will reduce the resolution time,” said Shroff.
“This will see a faster response and I suppose faster disposal also because this is like a summary proceeding and is not intended to have a detailed debate through the judicial process. It is more intended now to be completed as a fastrack, quick remedial action,” he added.
Shroff said that the IBC amendments have made sure that the resolution process is followed as per the law.
On the deadline front, Shroff said, “If the approval has not become final, supposing the NCLAT has stayed the effectiveness of the scheme then the 90-day rule will come into play.”
“If the approval has not happened then also the 90 day period has to prevail,” he added.
According to Bansal, IBC amendments make a committee of creditors (CoC) the final decision maker for resolution.
“I think the system needs to recognise that there is a security and there is a difference between secured, unsecured and there is a difference between financial and operational creditors,” added Bansal.
“Till now financial creditors have always been fair and equitable in that sense. Equitable doesn’t mean equal,” he said.