The Lok Sabha on Thursday passed the Insolvency and Bankruptcy Code, 2015 — a new law aimed at speedy winding up of companies, lower non-performing assets and redeployment of capital for productive uses. The government accepted all suggestions made by the joint committee on the Code, which sought to keep employees’ and workers’ interest on top during bankruptcy. Against the backdrop of massive loan defaults by Vijay Mallya-owned Kingfisher Airlines, the government said it intends to enter into cross-border treaties to confiscate overseas assets of wilful defaulters and recover dues of banks. As members expressed concern over rising instances of wilful defaults such as that by Mallya, Minister of State for Finance Jayant Sinha said bankruptcy framework and the normal procedure against them would continue in a parallel manner. Sinha was replying to a debate on the Insolvency and Bankruptcy Code Bill that seeks to update and consolidate existing laws, which was approved by the House later. [related-post] As suggested by the Joint Committee, two provisions are being added to the draft law: One, Centre may enter into a pact with a foreign country for enforcing provisions of the Code. Two, a Letter of Request to a country outside India seeking information. Sinha said India has already discussed the matter with other countries. “They have said that when we have such a law in the country, then such attachments and confiscation will be easily done . this law will help,” he said. He said “employees and workmen” would have first right during liquidation of assets under the law. Under this legislation, government comes only after them, he said and emphasised that “we want people to come first”. The Joint Committee headed by Bhupinder Yadav had recommended that in case of insolvency, interest of the workers should be fully protected and they should be given dues for 24 months as against 12 months proposed in the earlier draft. Sinha said the legislation is a transformational building block for the economy and there would be one law dealing with bankruptcy while doing away with at least 12 different laws. The new framework would help improve India’s position in the World Bank’s ease of doing business ranking, he said. Touching upon various aspects of the legislation, Sinha said it would re-address the powers of borrowers and creditors as well as bring in more transparency in the bankruptcy process. At present, the information about the process is fragmented, he added. As per this law, information utilities would be created to provide creditors with information about borrowers such as how much money has been borrowed. The Bill also provides for setting up of a ‘Insolvency and Bankruptcy Board of India’ to regulate professionals, agencies and information utilities engaged in resolution of insolvencies of companies. Chandrajit Banerjee, director general, CII said: “Efficient Insolvency and Bankruptcy code is a critical cog which was missing till date in India and this was one of the main reasons for India’s low ranking in ‘ease of doing business’. The subject of default has been in news of late and the Code could not have come at a more opportune time, since this subject would also get dealt with through this Code to some extent.” WATCH INDIAN EXPRESS VIDEOS HERE
