The government plans to introduce a bill in Parliament on Monday to deal with sick companies that turn insolvent for genuine reasons. The bill — Insolvency and Bankruptcy Code — once voted into law will replace a string of archaic legislations with a modern contemporary law, which will help companies opt for easy exits, in a move that will further improve ease of doing business in the country.
“Finance minister will introduce Insolvency and Bankruptcy Bill in Parliament tomorrow,” Shaktikanta Das, secretary, department of economic affairs tweeted on Sunday.
The move was first announced by finance minister Arun Jaitley in the budget. Last month, the Bankruptcy Law Committee headed by former law secretary TK Vishwnathan released the first draft of a proposed bankruptcy law modelled on the USA’s tested Chapter 11 bankruptcy code, which handholds insolvent companies and aids banks that would have lent to such companies.
The bill could be referred to the standing committee for a full and thorough examination.
“To have the bankruptcy code in place, to have it working properly, to get the appropriate legislation passed, it will take some time but once its passed, we will have a world-class bankruptcy resolution,” minister of state for finance Jayant Sinha told HT in an interview earlier.
The World Bank’s ease of doing business index places India at a lowly 136 in insolvency laws.
The Vishwnathan-led panel has proposed a timeline of 180 days for dealing with applications for insolvency resolutions, besides early identification of financial stress in companies.
The Parliament’s winter session, which has seen 12 bills being passed and 6 new introduced in the Lok Sabha as of Sunday, will come to an end on Wednesday. The Centre has lined up 18 bills for discussion in the remaining sittings of the Rajya Sabha.
Hindustan Times, New Delhi, 21st Dec. 2015
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