Insolvency law committe to finalise report this month for proposed amendments to Insolvency and Bankruptcy Code

Insolvency Law: A high-level panel looking into various aspects of the insolvency law is expected to finalise its report this month wherein recommendations for "targeted amendments" will be made to the government, a senior official said. A rising number of cases involving stressed assets are being taken up for resolution under the Insolvency and Bankruptcy Code (IBC), which came into force in December 2016. The 14-member panel has the mandate to identify and suggest ways to address issues faced in the implementation of this law.

The Insolvency Law Committee has circulated the draft of its report to the members and the final report is likely to be finalised this month, the official said on the condition of anonymity. After considering the panel's recommendations, the Corporate Affairs Ministry will prepare the draft Bill for proposed amendments to the IBC. This would be the second time that the IBC would be amended.

The basic structure of the IBC will not be disturbed and "targeted amendments" will be carried out. It would also address all "unintended consequences" with respect to implementation of this law, the official said. Without elaborating on the proposed changes, the official said there would be "something for home buyers also".

There have been concerns about incomplete real estate projects and consequent hardships faced by home buyers. Some realty firms are also facing insolvency proceedings. Against this backdrop, there are also suggestions from certain quarters on having provisions in the IBC to provide relief to home buyers.

In January, the IBC was amended to prevent unscrupulous persons from misusing the law. Wilful defaulters and those whose accounts have been classified as non-performing assets, among others, are barred from bidding for stressed assets under the IBC.

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The committee, headed by Corporate Affairs Secretary Injeti Srinivas, would identify issues that might "impact the efficiency of the corporate insolvency resolution and liquidation framework" as well as make recommendations to address them. The IBC -- which provides for market-determined and time-bound insolvency resolution process -- comes under the ministry.