Parliament passes insolvency and bankruptcy bill
New Delhi, Aug 10 (PTI) A bill to amend the Insolvency
and Bankruptcy Code (IBC) 2016, allowing home buyers to be
treated as financial creditors and seeking to set up a special
dispensation for small sector enterprises, was passed by
The bill, which was passed in Lok Sabha on July 31, was
approved in the Rajya Sabha today by voice vote.
The legislation seeks to replace the June 6 ordinance
that sought to put these amendments into force to aid quick
resolution of several bankrupt firms.
Replying to the debate on the Insolvency and Bankruptcy
Code (Second amendment) 2018 in the Upper House, Finance
Minister Piyush Goyal said its objective was to provide
resolution to small bankrupt firms and, at the same time, take
stringent action against big bankrupt businesses.
He said the bill aims to ensure that all cases are led to
resolution instead of liquidation.
"We want faster resolution of cases. ....We don't want
liquidation. Insolvency will not help the country. Assets
worth crores should put to use," he said.
The Minister said the Insolvency Law Committee, which
was set up in November 2017, had submitted the report on May
26 this year and every recommendations of the panel has been
accepted and incorporated in the amendments.
On the approval of a resolution plan, the Minister said
the report said it should be approved by a panel of creditors
by a vote of not less than 66 per cent of the voting share of
financial creditors. For routine decisions, it should be 51
per cent vote requirement.
Goyal said the government is trying to increase the
strength of NCLAT to address the pendency of cases. "The
number of courts, judicial members and technical members are
being increased," he said.
Besides, a group has been set up to see speedy resolution
of about 40,000 cases in NCLAT that are simple in nature and
can be resolved by imposing non-discretionary penalty, he
On a member's query regarding less recovery of assets
through the resolution process, Goyal said "there is a good
recovery. ...If you look at the cases so far, 32 cases are
resolved through resolution and up to 55 per cent have been
Earlier, it used to take an average of three years to
resolve a matter, it has now come down to one year. Earlier
the cost of resolution used be higher at 9 per cent, now it
has come down to one per cent, he said.
He also stated that the NCLAT was an independent body and
the government does not interfere in its functioning.
The minister said it is not that in all cases, the
promoters are wiful defaulters. Wherever promoters are wilful
defaulters, the action should be taken strictly.
"Now there is fear among big borrowers that they have to
repay their loans. Earlier, there was a responsibility to
repay loans was on small borrowers. Big players used think it
is not our problem, banks have to recover the loan. This
equation has changed today," he noted.
Opposing the bill, D Raja (CPI) said that frequent
changes to the law is being done to help defaulters and the
government wants to bail out the defaulters.
In the Bhushan Steel case, he alleged that the banks lost
Rs 21,000 crore but a corporate house gained this amount. He
sought to know why the government has a "soft corner towards
"The government should bail out the poor and not the
corporates. The voting requirement is reduced to 66 per cent
from 75 per cent to help one corporate," he alleged.
Neeraj Shekhar (SP), S R Balasubramaniyan (AIADMK),
Kahkashan Perween (JD-U), P Battacharya (Cong) were among
others who supported the bill, but expressed concern over the
government taking the ordinance route to amend various laws.
ARC(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)