The Insolvency and Bankruptcy 2015 was brought in Lok Sabha on 21st December 2015 and was appeal to Joint Committee. The report was shown in Lok Sabha and Rajya Sabha on 28th April 2016. This code has been passed by Lok Sabha on 5th May 2016 and by Rajya Sabha on 11th May 2016.
codes read as follows:-
For revise the laws related to reorganization and insolvency resolution of corporate persons, partnership firms and individuals in a time bound manner for maximization of value of assets of such persons for advertise entrepreneurship, availability of credit and balance the interest of all the stakeholders including alteration in the priority of payment of Government dues and to establish an Insolvency and Bankruptcy Fund and for matters connected therewith.
- Codes cover Insolvency of individuals, unlimited liability partnerships, Limited Liability partnerships and companies.
- The Insolvency Resolution Process for individuals and unlimited liability partnerships varies from the one for companies and LLPs. The Debt Recovery Tribunal should be the Adjudicating Authority with jurisdiction over individuals and unlimited liability partnership firms. The Appeals from the order of DRT should be taken in Debt Recovery Appellate Tribunal. The National Company Law Tribunal shall be the Adjudicating Authority with jurisdiction over companies & LLPs. The appeal from the Order of NCLT should be taken in National Company Law Appellate Tribunal.
- Codes aims to abolished of the presidency towns insolvency act 1909 and provincial insolvency act 1920.
CODES AIM TO REVISE THE FOLLOWING ELEVEN LAWS:-
- The Indian Partnership Act 1932
- The Central Excise Act 1944
- The Income Tax Act 1961
- The Customs Act 1962
- Recovery of Debts Due to Banks and Financial Institutions Act 1993.
- The Finance Act 1994.
- The Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002.
- Sick Industrial Companies (Special Provisions) Repeal Act 2003.
- The payment and Settlement Systems Act 2007.
- The Limited Liability Partnership Act 2008.
- The Companies Act, 2013.
The codes come up with an insolvency regulator to keep monitoring over:-
- Insolvency Professionals (IP)
- Insolvency Professionals Agencies (IPA)
- Information Utilities (IU)
The Insolvency and Bankruptcy Board of India will guide these agencies to develop professional standards, codes of ethics and exercise a disciplinary check on faulty members for development of a competitive industry for insolvency professionals. The codes offer information utilities which would gather, collect, attest and broadcast financial information from listed companies and financial as well as operational creditor’s information from companies. An individual insolvency database is also introduced to be set up with the goal of giving information on insolvency status of individuals.
The Code proposes a fast process and timeline of 180 days is set for dealing with applications for corporate insolvency resolution. This can be extended for 90 days by the Adjudicating Authority only in some exceptional cases. During insolvency resolution period ( 180/270 days), the management of the debtor is placed in the hands of an resolution professional. An insolvency resolution plan made by the resolution professional has to be accepted by at least 75% of voting share of the financial creditors. Plan will need sanction of the Adjudicating Authority. If plan is rejected, the Adjudicating Authority will make an order for the liquidation. The code offer a fast track insolvency resolution process for companies who have small operations. The process will have to be completed within 90 days that can be extended up to 45 days more if the 75% of the financial creditors agree with this extension.
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