Finance Minister Arun Jaitley on Tuesday directed senior officials of the ministries of finance and corporate affairs to take necessary action for implementation of Insolvency and Bankruptcy Code (IBC) 2016 in a time-bound manner.
“The finance minister said that an immediate action is required on the key requirements for implementation of the IBC including setting up of Insolvency and Bankruptcy Board of India (IBBI), notifying rules and regulations relating to insolvency professionals (IPs), insolvency professional agencies (IPAs) and corporate insolvency among others,” said a finance ministry statement.
Jaitley was speaking at a meeting to review implementation of the bankruptcy code. Economic affairs secretary Shaktikanta Das, financial services secretary Anjuly Chib Duggal, corporate affairs secretary Tapan Ray and senior officers the Reserve Bank of India and the Securities and Exchange Board of India (Sebi) attended the meeting.
Corporate affairs secretary made a presentation on the roadmap assuring implementation of the bankruptcy code in a time bound manner. Jaitley asked the officials of the Ministry of Corporate Affairs to notify NCLT (National Company Law Tribunal) Benches to deal with corporate insolvency, take action for registration of IPs and IPAs among others, the statement said.
Notified by the government in May, the Insolvency and Bankruptcy Code, 2016 seeks to consolidate and amend laws relating to reorganisation as well as insolvency resolution of corporate persons, partnership firms and individuals in a time bound manner. The code is aimed at speedy winding up of companies, reduction in non-performing assets and redeployment of capital for productive uses.
Till the enactment of the bankruptcy code, numerous authorities handled liquidation. While liquidation of companies was being handled by high courts, individual cases are dealt with under the Presidency Towns Insolvency Act, 1909 and Provincial Insolvency Act, 1920.
The other laws which dealing with bankruptcy include SICA (The Sick Industrial Companies Act, 1985); Recovery of Debt Due to Banks and Financial Institution Acts, 1993, Sarfaesi (Securitisation and Reconsutriction of Financial Assets and Enforcement of Security Interest) Act, 2002 and Companies Act, 2013.
As a result, four different agencies, the high courts, the Company Law Board, the Board for Industrial and Financial Reconstruction (BIFR), and the Debt Recovery Tribunals (DRTs), are overlapping jurisdiction, giving rise to the potential of systemic delays and complexities in the process.
The bankruptcy code is aimed at overcoming these challenges. The Code also seek to balance the interest of all the stakeholders including alteration in the priority of payment of government dues.
The Code designates NCLT and Debt Recovery Tribunal (DRT) as the adjudicating authorities for corporate persons and firms and individuals, respectively, for resolution of insolvency, liquidation and bankruptcy.