The third amendment to the Insolvency and Bankruptcy Act has been notified on 16th August 2019 by the parliament through the Insolvency and Bankruptcy Code (Amendment) Act, 2019.
Following significant changes have been brought by the amendment:
- The amendment recognises corporate restructuring like mergers and amalgamations as standard procedures of corporate insolvency resolution and includes them in the ambit of ‘resolution plans.’
- The amendment mandates recording of the legitimate reason by the adjudicating authority for exceeding the time limit. Prior to the amendment, time restriction was imposed on adjudicating authority only in ascertaining whether there is a default in payment by corporate debtor, upon receipt of application of financial creditors.
- As per the amendment, entire corporate insolvency resolution process must be completed within three hundred and thirty days inclusive of the time given as extension and taken for legal proceedings.
- The amendment provides for financial creditors to make decisions on the basis of voting with voting power proportional to their claims, through authorised representative.
- The amendment also empowers the committee of creditors to decide to liquidate the corporate debtor any time before preparation of information memorandum for finalising the resolution plan.
- Once the resolution is made, it will be equally binding upon all stake holders without exemption including government authorities.
- The repayment of debts shall be done, considering the order of priority of creditors.
Click here to see amendment.
