oppn parties Welcome Amendments To The IBC

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  • NCLT clears Hinduja acquisition of Reliance Capital at Rs 9650cr upfront payment within 90 days of approval of resolution plan
  • Stocks returned to winning ways on Tuesday: Sensex gained 305 points to 73095 and Nifty 76 points to 22198
  • Commonwealth Chess championships: Mitrabha Guha wins title by scoring 7.5 points in 9 rounds
  • WPL: RCB beat Gujarat Giants by 8 wickets
  • Bengal starts paying MNREGA workers out of own funds as Central disbursement is stopped due to alleged 'discrepancies' in accounts
  • ISC chemistry paper postponed to March 21 just hours before start of exam due to "unforeseen circumstances"
  • Ghajal legend Pankaj Udhas passes away. he was 72
  • Calcutta HC says that there is no stay on arresting TMC leader Shahjahan and he should be arrested immediately
  • With latest data showing big fall in consumption of food and cereal, the government might rejig retail inflation data
  • Stock markets go down on Monday: Sensex loses 352 points to 72790 and Nifty 90 points to 22122
  • Paytm founder Vijay Shekhar Sharma steps down as chairman of Paytm Payments Bank
  • Rohit Sharma says only players with hunger to perform in Tests will be given chances, issuing a stern warning for those who play truant
  • Fourth Test: Shubman Gill (52 no) and Dhruv Jurel (39no) take India home after they slumped to 120/5
  • Fourth Test: India win by 5 wickets to claim series 3-1 with one Test remaining
  • UK writer Prof Nitasha Kaul, who was invited by the Congress government in Karnataka for the international conferecne on the Constitution, was detained and deported upon her arrival at Bengaluru airport
Cross-voting in Rajya Sabha elections enables BJP to snatch seats in UP & Himachal /////// Congress government in Himachal in trouble as some MLAs revolt
oppn parties
Welcome Amendments To The IBC

By A Special Correspondent

The main purpose of the Insolvency & Bankruptcy Code (IBC) is to allow secured lenders to recover a major part of their dues in case a company goes under. That purpose was being defeated as, in the absence of clarity, the NCLAT was interpreting the law differently and treating all creditors equally. The repayment system under IBC is designed as a waterfall mechanism in which secured and senior lenders get primacy as opposed to unsecured and subordinate lenders. The government has now approved amendments to the code that will allow payments to be made first to secured lenders and workmen before the same is made to unsecured and operational creditors.

The Committee of Creditors (CoC) under the IBC has been made the main body to decide the repayment mechanism through majority vote. The courts will now not have the luxury to interpret the law according to their wish as things have been spelled in black and white. It is always upon the Parliament to spell out the law. The tribunals and the courts are there only to interpret and operationalize it. Confusion arises only when the law is not clear and the government has done well to rectify the grey areas.

Another welcome amendment is for allowing the majority vote of the homebuyers in the C0C to count as votes of 100% of homebuyers for the purpose of the resolution plan. This was necessary as the resolution gets prolonged as other homebuyers approach the courts and get stay orders on points of law. The government is also alive to the fact that delays defeat the purpose of the IBC. Hence, it has prescribed that the total process, from admission of the case to final resolution, be completed in 330 days. While this is good, the NCLT is woefully short of resources and as more cases come up, the government will have to provide it with both human and financial resources for it to work efficiently and maintain timelines.