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Upper House passes IBC (Amendment Bill)

Our Bureau New Delhi | Updated on August 03, 2021

Nirmala Sitharaman, Finance Minister   -  PTI

‘Will cut cost, expedite insolvency process’

The Rajya Sabha passed the Insolvency and Bankruptcy Code (Amendment) Bill on Tuesday, amid protests by the Opposition members on the Pegasus spyware issue. Union Finance Minister Nirmala Sitharaman, while piloting the Bill, said the provisions have been brought in keeping in mind the situation of MSMEs during the pandemic.

Sitharaman said there was a feeling that there could be a surge in insolvencies after some sections of the IBC Act come to an end. During the Corona period, nobody could take the MSMEs to court or initiate insolvency processes. But, the protection ended on March 24, and there was this feeling that there could be a lot more surge of insolvencies among the MSMEs, she said.

But contrary to expectations there was no surge in the insolvencies of MSMEs. She said under the new provisions, the debtor will still be in control and the creditors will be working together and, therefore, it will cut the cost and speed up the insolvency process.

Later, replying to the brief debate, she condemned the disruptions and said BJD MP Amar Patnaik was not allowed to put his views on the Bill by the protesting Opposition MPs. “It is absolutely strange that the people who have been individually contributing to the disturbance, when their turn comes, they want to stand up and ask the House to be quiet so that they can speak. How selfish can this be!,” she added.

NCLT strengthening

Talking about the concerns voiced on the vacancies in the NCLT, she said she will ensure to fill them. “I just want to inform the members that the number of Benches has increased to 15 from 10 during 2018-19. The number of Members has been increased in a phased manner with 28 Members appointed in 2019 bringing the total number to 52. After merging the office of some of the Members, presently, 29 Members are in position. So, we shall be making sure that the appointment of the President, NCLT, is also to be done in consultation with the Chief Justice of India and, therefore, we are giving importance to that. Also, till all the regular posts are filled up, approval has been granted for engaging a total of 725 posts at various levels and Law Research Associates with a norm of three LRA per court of two Members, a total of 93 LRAs for 62 Members on contractual basis,” she said.

‘Recovery higher’

She said civil and criminal liability is attached to any act of wilful misinformation or omission of information. “Insolvency professional is tasked with clear duty to report mismanagement on fraudulent practices. Out of 1,349 liquidation cases, more than 74 per cent of the cases ending into liquidation are erstwhile BIFR cases or defunct company-related cases. Going by the experience, the value realised in the resolution cases is around 190 per cent of the liquidation value. Therefore, this is higher than the higher rate of recovery through recovery loss and in comparison with RBDA,” she claimed.

Published on August 03, 2021

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