oppn parties Welcome Amendments To The IBC

News Snippets

  • Defence minister Rajnath Singh says India might revise its policy of "no first use" of nuclear weapons in national interest
  • Ravi Sashtri to remain head coach of Team India fro another two years
  • India defends move on Article 370, says entirely an internal matter
  • UN holds closed door meet on Kashmir but China fails in its attempt to censure India
  • Limited public transport service to be restored in J&K from this weekend
  • Educational institutions to reopen in phases from Monday in J&K
  • Government decides to restore telecommunications in phases in J&K starting with landline phones this weekend
  • PM Modi announces that India will have a Chief of Defence Staff soon
  • PM Modi says government worried about population explosion, will introduce schemes to control it
  • Prime Minister Modi explains the decision to read down Article 370 in his address to the nation on the occasion of Independence Day
  • All 6 accused in Pehlu Khan lynching case acquitted
  • Cricketers will now be tested for dope as BCCI decides to come under NADA after a prod from the government
  • NDTV promoters Prannoy and Radhika Roy prevented from travelling abroad. Channel says it amounts to subversion of media freedom
  • TMC spokesman Derek O'Brien questioned for two hours by the CBI on the party mouthpiece 'Jago Bangla'
  • Former finance minister Arun Jaitley has been admitted to AIIMS for breathing problems. His condition is said to be stable
India Commentary wishes all its readers a very Happy Independence Day. Jai Hind
oppn parties
Welcome Amendments To The IBC

By A Special Correspondent

The main purpose of the Insolvency & Bankruptcy Code (IBC) is to allow secured lenders to recover a major part of their dues in case a company goes under. That purpose was being defeated as, in the absence of clarity, the NCLAT was interpreting the law differently and treating all creditors equally. The repayment system under IBC is designed as a waterfall mechanism in which secured and senior lenders get primacy as opposed to unsecured and subordinate lenders. The government has now approved amendments to the code that will allow payments to be made first to secured lenders and workmen before the same is made to unsecured and operational creditors.

The Committee of Creditors (CoC) under the IBC has been made the main body to decide the repayment mechanism through majority vote. The courts will now not have the luxury to interpret the law according to their wish as things have been spelled in black and white. It is always upon the Parliament to spell out the law. The tribunals and the courts are there only to interpret and operationalize it. Confusion arises only when the law is not clear and the government has done well to rectify the grey areas.

Another welcome amendment is for allowing the majority vote of the homebuyers in the C0C to count as votes of 100% of homebuyers for the purpose of the resolution plan. This was necessary as the resolution gets prolonged as other homebuyers approach the courts and get stay orders on points of law. The government is also alive to the fact that delays defeat the purpose of the IBC. Hence, it has prescribed that the total process, from admission of the case to final resolution, be completed in 330 days. While this is good, the NCLT is woefully short of resources and as more cases come up, the government will have to provide it with both human and financial resources for it to work efficiently and maintain timelines.