Parliament passed the Insolvency and Bankruptcy Code (Second Amendment) Bill, 2020, with Lok Sabha passing it with a voice vote today.
Earlier, Rajya Sabha had passed the bill on Saturday. The bill amends the Insolvency and Bankruptcy Code, 2016 which provides a time bound process for resolving insolvency in companies and also among individuals.
The legislation seeks to temporarily suspend initiation of the corporate insolvency resolution process, CIRP under the Code. It replaces the Insolvency and Bankruptcy Code (Amendment) Ordinance, 2020 promulgated in June this year.
The Bill provides that for defaults arising during the six months from 25th of March this year, CIRP can never be initiated by either the company or its creditors.
The central government may extend this period to one year through notification. Insolvency is a situation where individuals or companies are unable to repay their outstanding debt.
Replying to the discussion, Finance Minister Nirmala Sitharaman said that Insolvency and Bankruptcy is the significant part of the business and it is helping the companies and people to resolve the issues without going to NCLT.
She said, amendments were brought due to the Covid-19 situation to give the immunity to the business from insolvency proceedings in this critical situation.
Appreciating the IBC mechanism she informed that it has helped in the recovery of the amount related to the non performing assets of scheduled commercial banks.
Giving the comparative analysis of the recovery made by the Lok Adalat, SARFAESI and IBC in 2018-19, she informed that under the IBC mechanism 42.5 percent recovery has been made which is the highest and it helped to recover more than Rs. 77 thousand crore.
On the employment front, she said, 258 companies were rescued under the IBC mechanism.
Congress members questioned the several provisions of the Bill urging that these must be relooked in the interest of the public.
Manish Tewari referring to some of the provisions said, it will benefit the big companies and prove to be detrimental for the small companies including MSMEs.
TMC members demanded that the legislation be sent to a parliamentary standing committee for further consideration.