Parliament passes Insolvency & Bankruptcy Code Bill

The Insolvency and Bankruptcy Code (Amendment) Bill, 2020 was passed by voice vote in the Rajya Sabha on Thursday. It was passed in Lok Sabha on March 6.

The amendments are aimed at streamlining the insolvency resolution process and to protect last-mile funding and boost investment in financially-distressed sectors.

The Bill replaces an ordinance.

Discussion on the motion to consider the Insolvency and Bankruptcy Code (Amendment) Bill, 2020 in the Rajya Sabha was moved by Union Finance Minister Nirmala Sitharaman.

After a debate on the Bill, Sitharaman explained to the members “why we are constantly coming up with amendments… Couldn’t we think of these aspects when the Bill was introduced in 2016 and even then, why so many ordinances?”

She pointed out that the government is listening to the industry — small, medium, big — and understanding their requirements with a change in law and with a change in approach.

“We waited for resolutions and the results coming out of them were not acceptable,” she said.

The Finance Minister said that earlier companies did not know where they were and debtors and creditors were both worried. “So the need to Insolvency and Bankruptcy Code arose and thereafter it was brought in 2016 and both Houses discussed and cleared the Bill,” she said.

The minister explained that because of the changing requirements and also the requirement to fine tune the Act itself, the need arose to amend every time.

“So we are also quick enough in coming up with changes to the Act… it has no other motive. We are absolutely responsive and are in tune with the time. Further, periodically, we are reminded that Supreme Court has come up with this order. We humbly accept the order of the Supreme Court. Our amendments are in line with what Supreme Court has said in letter and spirit,” she said.

“Amendments are periodic. Ordinance do come because we don’t want a hiatus,” she said.

She also spoke about performance of the National Company Law Tribunal.

“Total cases dealt by NCLT till January 31, 2020, are 64,423 out of which 27,107 pertain to Insolvency and Bankruptcy Code (IBC). Total cases disposed of were 43,102 out of which 14,977 pertain to IBC,” the minister said.

She also said that the total pending cases are 21,421 out of which 12,130 cases pertain to IBC.

The NCLT is encouraging disposal of cases under the IBC.

Talking about home buyers’ concerns following amendments, the minister said, “I had several rounds of meetings to address the issue of home buyers.”

She pointed that government understands the difficulties being faced by the home buyers . “We have show clear, pro-active initiatives to sort out the cases which are lying incomplete. “We are giving last-mile completion related funding through single window mechanism,” she said.

The minister also said that the number of cases pertaining to concerns of home buyers filed since inception NCLT is 2,454.”We are taking care of the interest of home buyers,” the minister said.

About Micro, Small & Medium Enterprises (MSME) concerns, the minister said, “We are working with the MSME Ministry and looking into suggestions that MSME Act should be amended.” The Insolvency and Bankruptcy Code, which came into force in 2016, has been amended thrice.