According to government officials, the Bankruptcy and Bankruptcy Code (IBC) could be strengthened soon, with a cross-border insolvency framework and steps to speed up case settlement being discussed in the upcoming budget session of parliament.
A code of conduct for the committee of creditors (CoC) that decides on bankruptcy resolution is also included in the proposed legal changes.
According to the sources, the planned cross-border insolvency legislation will allow lenders to include foreign assets of a bankrupt firm in its recovery actions, including offshore personal assets of promoters who have provided personal guarantees.
The draught legislation, according to a senior official, has taken into account feedback from stakeholders as well as recommendations from a parliament standing committee. “Now that all important viewpoints have been taken into account, we are in a better position to create the regulation,” the source told ET.
Officials said the corporate affairs ministry (MCA), which is finalising the bill, aims to implement the regime in the next financial year with certain protections.
What can you expect?
Global model legislation to be applied to cross-border insolvency.
All recommendations were debated and analysed by MCA.
Creating a robust framework for implementation success.
The plan is to implement the system the next fiscal year.
To speed up the settlement process, the IBC may change the CIRP.
The IBBI will enforce the creditors committee’s Code of Conduct.
They believe that cross-border legislation will be substantially applied.
In accordance with the UN Commission on International Trade Legislation’s (Uncitral) international model law, which establishes a foundation for cooperation between domestic and foreign courts.
Courts in nations that have approved the model law will be able to carry out orders against defaulters as a result of the legislation.
The model law is currently being adopted by at least 50 countries, including some sophisticated economies.
Courts in nations that have approved the model law will be able to enforce orders against defaulters under the new legislation. The model law is being adopted by at least 50 countries, including some industrialised economies. “By adopting it, we will have automatic access to all those nations and will not need to establish a separate agreement with them,” the official mentioned above added.