AMENDMENT OF THE INSOLVENCY AND BANKRUPTCY CODE, 2016

This is on an ordinance to amend the ‘Insolvency and bankruptcy code, 2016’. The amendment bill was introduced in the House of the people on 12th December 2019. However, the bill could not be taken up for consideration in the house as the session in the parliament was over. The president by the power vested in him under Article 123 of the Constitution, promulgated the current ordinance. 

This ordinance was introduced as there was a need for providing the priority in repayment to last-mile funding to corporate debtors to prevent insolvency in a situation when the company goes into insolvency resolution process or liquidation. This ordinance amends various sections of the parent act i.e. the Insolvency and Bankruptcy Code, 2016 

This ordinance further provides for the immunity against the prosecution of the corporate debtor by the addition of ‘Section 32A’ which states that any liability of the corporate debtor prior to the commencement of the corporate insolvency resolution process shall cease and the corporate debtor shall not be prosecuted for such an offense from the date the resolution plan has been approved by the adjudicating officer under section 31.

This ordinance also added the provision under ‘Section 32A (2)’ which helps in prevention of action against the property of a corporate debtor in relation to an offense committed prior to the commencement of the corporate insolvency resolution process of the corporate debtor, where such property is covered under the resolution plan approved by the Adjudicating Authority under Section 31.

Conclusion:

It was deemed necessary to amend the insolvency and bankruptcy code, 2016 in order to fill the critical gaps in the corporate insolvency framework that is why the ordinance was introduced in the parliament.

Author:

eStartIndia Team