Parliamentary Panel Scrutinizes Insolvency Code for Amendments

A parliamentary committee identifies ambiguities in the Insolvency and Bankruptcy Code, considering amendments following a Supreme Court judgment affecting JSW Steel's resolution plan for Bhushan Power. Discussions also highlighted delays and gaps in the law's implementation, with potential future amendments anticipated to improve the insolvency mechanism.

A parliamentary committee has flagged ambiguities in the Insolvency and Bankruptcy Code (IBC) amid discussions on potential amendments to improve the law. The government is reportedly considering changes following a critical Supreme Court judgment affecting JSW Steel's resolution plan for Bhushan Power and Steel Ltd (BPSL).

The Standing Committee on Finance, led by BJP MP Bhartruhari Mahtab, discussed the recent Supreme Court ruling that put a status quo on BPSL's liquidation. This order has stirred debate over the insolvency mechanism's effectiveness, with JSW Steel arguing that liquidation would harm various stakeholders, including lenders and employees.

The committee, which included Corporate Affairs officials and bank representatives, examined existing issues like delays in the resolution process. Previous committee reports, such as one led by Jayant Sinha, have highlighted gaps in the law, prompting some past amendments. The government is expected to pursue further adjustments to the IBC, which has aided distressed companies and creditors since its 2016 enactment.

(With inputs from agencies.)