INSOLVENCY CODE ON MCA MENU
- Bid to confirm errant promoters don’t regain control, usher in simpler framework for individual insolvencies. The Ministry corporate affairsis proposing to undertake multiple changes under the IBC 2016, and the same is expected to include the ways of ensuring that the IBC method doesn’t authorize and allow a failed promoter to regain control of the deceased entity. The review is being conducted after seeing how the law has worked within the past few months and supported feedback received, said senior officials.
- A simpler framework for resolving individual insolvencies to permit matters to be handled by a mediator when there's no dispute is one such suggestion. Bankers have identified that under this law a founder could possibly go back to the reins of a corporation. “The promoter mustn't be able to buy his own firm through a shell company after the insolvency proceedings, “a senior bank executive said. the govt. has also received a suggestion to form the code more comprehensive to hide entities like trusts, societies and Hindu Undivided Families (HUFs) still.
- The Insolvency and Bankruptcy Code (IBC) received presidential assent in May 2016 with the primary set of cases filed at the National Company Law Tribunal (NCLT) in December 2016.
- Easing compliance requirements regarding routine disclosures while the insolvency process is on is another proposal as is the establishment of an in-depth framework to accommodate cross-border insolvencies.
- Allowing insolvency professionals, who are enabled to act only as individuals, to make firms in an exceedingly situation where an outsized and complex transaction has to be handled is another idea on the table. The finance ministry will check up on the matter and hold discussions with stakeholders and regulators, another senior official said.
- It is believed that IBC tends to be more predictable than the erstwhile laws present. The govt should learn from the last one year’s experiences to confirm there aren't any hiccups as there are some gaps within the language leaving things to interpretation.
- Also, since the processes and transactions under the code require valuation of assets, the govt. is probably going to contemplate regulating the profession of valuers and, if required, enable enforcement action against them. As per the Companies Act, 2013, the draft rules have been prescribed for registering and regulating the valuers and the same is regulated by the Insolvency and Bankruptcy Board of India. The code, however, doesn't stipulate any regulation for valerian the case of people, the suggestion is to permit insolvency to be settled by a bankruptcy professional if there's no dispute involved. this can make sure that courts don't seem to be overburdened.
- Also, the Ministry of Corporate Affairs addressed about the fears arising in respect of resolution plans being getting blocked by promoters, by using the provisions of Company law, provided they are entailed for the transfer of control to a 3rd party. It issued a circular clarifying that shareholder approval isn't required for resolution plans.
Update Notes IBBI :
Important announcement by IBBI relating to LIE and valuation examination. Cooling of period of 2 months applicable between 2 attempts (maximum 6 attempts in 12 months). To be implemented after expiry of 3 months from today.
IBBI circular on Frequency of attempts in Limited Insolvency Examination/ Valuation Examination
