The 1st Insolvency Law Committee Report and Insolvency and Bankruptcy Code (Amendment), Ordinance 2018
Ironing-out the initial implementation issues under the Insolvency and Bankruptcy Code
The 1st Insolvency Law Committee was set up in November, 2017 to evaluate the working of the Insolvency and Bankruptcy Code, 2016 and suggest reforms for its seamless implementation. The Committee’s report identified various issues arising from, and impacting the functioning of, the insolvency resolution and liquidation processes under the Code.
Among other measures, it recommended amendments to – (i) clarify ambiguities in relation to the status of home buyers as financial creditors; (ii) resolve the confusion around permissibility of withdrawal of a case after its admission; (iii) provide necessary guidance on the manner of obtaining statutory approvals for resolution plans; (iv) empower the government to carry out modifications to the Code in relation to Micro, Small and Medium Enterprises; and (ii) re-calibrate the voting thresholds for swifter decision-making in the committee of creditors.
Most of the Committee’s recommendations were implemented through the Insolvency and Bankruptcy Code (Amendment) Ordinance 2018, which was subsequently passed by Parliament as the Insolvency and Bankruptcy Code (Second Amendment) Act, 2018.