oppn parties Welcome Amendments To The IBC

News Snippets

  • Supreme Court stays Karnataka HC order blocking operations of Kannada news channel Power TV. Says right to free speech must be "zealously protected" by courts
  • Opposition slams Centre for Samvidhan Hatya Diwas, says the Constitution is being murdered on daily basis under the present BJP government
  • Centre notifies June 25 as 'Samvidhan Hatya Diwas'. This was the date on which Indira Gandhi imposed the Emergency in 1975
  • Bengal moves SC against state governor for keeping 8 bills pending
  • Mamata Banerjee meets Uddhav Thackeray in Mumbai, says 'khela on' and promises to campaign for his party in the Maharashtra assembly elections
  • Stars and eminent persons from across the globe attend the wedding of Anant Ambani with Radhika Merchant at the Jio World Convention Centre in Mumbai
  • Controversial IAS trainee Puja Khedkar faces dismissal from service if her quato and disability claims are found false
  • SC says stay on bail should be in rare cases like terrorism or where order is perverse otherwise personal liberty and Article 21 will go for a toss
  • Supreme Court says judicial review of arrests by ED is necessary to check improper exrecise of power to arrest
  • Supreme Court grants interim bail to Arvind Kejriwal in the money laundering case in Delhi liquor policy case but he will remain in jail as he is under CBI detention in the corruption case in the same scam
  • Retail inflation rises to 5.1% in June, the highest in 4 months
  • Government to avoid merger of BSNL-MTNL. Instead, MTNL's operations will be shifted to BSNL to give the latter an all-India presence
  • Women's U-19 Asia Cup: India to clash with Pakistan on July 19
  • Paris Olympics badminton draws: P V Sindhu in easy group but gets a tough draw later while H S Prannoy and Lakshya Sen might clash in pre-quarter finals
  • After two consecutive wins, India look to seal series when they meet Zimbabwe in the 4th T20 today
BJP and allies win all 9 seats they contested in the Maharashtra Legislative Council poll
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.