【破产新闻】Bankruptcy Code law amended

DECEMBER 29, 2017

 

The Lok Sabha amended the Insolvency and Bankruptcy Code law to prevent wilful defaulters and existing promoters from taking part in insolvency proceedings of stressed assets of companies unless they make their bad loans operational by paying up interests.

 

The bill will replace an ordinance that was brought in November to prevent unscrupulous promoters from misusing the provisions of the Insolvency and Bankruptcy Code (IBC).

 

Replying to the debate, Finance Minister Arun Jaitley said the government can't allow loan defaulters to "merrily walk back" and take part in bidding proceedings.

 

A defaulter, however, can become "eligible to submit a resolution plan" if they clear all dues with interest and other charges relating to their NPA accounts.

 

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Responding to Congress member Gaurav Gogoi who had pointed that gross Non Performing Assets of banks had gone up from 2.7 per cent in 2011 to 9.2 per cent in 2016, Mr Jaitley said,"Gogoi ji has studied in good educational institutions of the world and he must have many times heard of the proverb that there were three types of lies -- lies, damned lies and statistics. Today he has himself become a victim of the third one."

 

The Finance Minister said NPAs are a legacy issue and during the UPA regime, banks resorted to "window dressing and ever-greening of loans."

 

While moving the bill, Mr Jaitley had said the IBC law has been learning process for the government as changes have had to be made to ensure that ineligible people don't find loopholes to walk back into the companies against who insolvency proceedings were initiated.

 

Commenting on the changes to the IBC, tax experts said that while the intention of the government is good, all bad loans may not be the result of wilful default, diversion or misappropriation of funds.

 

"In a market driven economy, failure can be for various reasons like change in market conditions, severe competition, change in technology, change in Government policies, stay by Supreme Court, bona fide management decisions (which later proved to be incorrect) and many others,"V.S. Datey of Taxmann, a consultancy service.

 

Source:http://www.thehindu.com/news/national/bankruptcy-code-law-amended/article22328218.ece

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