New Delhi: A government-appointed panel on Wednesday suggested a modern bankruptcy law to deal with insolvency cases within 180 days that may arise on account of business failures or economic downturns, with a view to promoting ease of doing business and spur economic activities.
The government, according to Finance Minister Arun Jaitley, would try to introduce a bill on bankruptcy law in the forthcoming Winter Session of Parliament.
“My endeavor would be try and introduce it in the next session of Parliament," he said. T K Vishwnathan, former Law Secretary, presented the Bankruptcy Law Committee Report to Jaitley. The draft legislation prepared by the panel also proposes early identification of financial distress so that steps could be taken to revive the ailing company.
The report notes that the recovery rates obtained in India are among the lowest in the world. "When default takes place, broadly speaking, lenders seem to recover 20 per cent of the value of debt," it said. “The Bill seeks to improve the handling of conflicts between creditors and debtors, avoid destruction of value, distinguish malfeasance vis-a-vis business failure and clearly allocate losses in macroeconomic downturns," the report said.
It prescribes "a swift process and timeline of 180 days" for dealing with applications for insolvency resolution. It also lays down a "clear, coherent and speedy process" for early identification of financial distress and revival of the companies.
The draft proposes to establish an Insolvency Regulator to exercise regulatory oversight on insolvency professionals and agencies. “The Insolvency Adjudicating Authority will have the jurisdiction to hear and dispose of cases by or against the debtor," it said and added the Debt Recovery Tribunal should be the Adjudicating Authority with jurisdiction over individuals and unlimited liability partnership firms.
The report recommends a transition provision during which Central Government will exercise all powers of Regulator till the time the Regulator is established. The National Company Law Tribunal (NCLT) should be the Adjudicating Authority with jurisdiction over companies, and limited liability entities, it added.
The panel expects implementation of the report will increase GDP growth by fostering the emergence of a modern credit market, and particularly the corporate bond market. GDP growth will accelerate when more credit is available to new firms including firms, which lack tangible capital.
Meanwhile, Finance Ministry said that after taking the suggestions into consideration government will take a final decision on the report and introduce the Bill in Parliament.
The Ministry has invited comments and suggestions on the report available on its website till November 19. Meanwhile, taking a jibe at the spiraling prices of dal, Vikhe Patil also said Congress will gift boxes comprising all kinds of dal to Chief Minister Devendra Fadnavis and his ministerial colleagues for Diwali.
"Even if the government claims, that rates of dal have decreased, but still it is being sold at Rs 200 per kg. All the government’s assurances that the commodity seized in raids from hoarders, will be auctioned in open market has not yet been fulfilled," he said.
He also demanded inquiry into the incident involving BJP MLA Dr Ashish Deshkmukh, whose photos of hunting have gone viral on social media.
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