Insolvency and Bankruptcy code (Amendment) Ordinance, 2017
The Insolvency and Bankruptcy Code (Amendment) Ordinance, 2017 circulated on November 23, 2017. It amends the Insolvency and Bankruptcy Code, 2016. The Code provides a time-bound process for resolving insolvency in companies and also among individuals. Insolvency is where individuals or also companies are not able to pay their debts.
It has regulatory oversight over the Insolvency Professionals, Insolvency Professional Agencies and Information Utilities.
The Official site, Insolvency and Bankruptcy Board of India, Retrieved on 11th December 2017
A resolution applicant is a person who makes a resolution plan and also submits it to insolvency professional. (A resolution plan includes the details of how the debt will be restructured of a defaulting debtor). The Ordinance amends this provision of a resolution applicant as a person who makes and also submits a resolution plan after receiving a call by the insolvency professional to do so.
Eligibility for resolution applicants
The Code specifies that an insolvency professional will have control over the defaulting company and also ask the resolution will take control of the defaulting company, and also invite applicants to submit resolution plans. The Ordinance amends this provision to state that a resolution professional will only ask those applicants to submit plan , who will also fulfill certain conditions laid down.
Ineligibility to be a resolution applicant:
A person will be ineligible to submit a plan if:
(i) he is an unable to repay the debts.
(ii) the Reserve Bank of India identifies him as willful defaulter.
(iii) his account is also a non-performing asset for more than a year,
(iv) convicted for an offence punishable with two or more years of imprisonment,
(v) he has also been disqualified as a director under the Companies Act, 2013,
(vi) prohibited from trading in securities,
(vii) indulged in fraudulent transactions,
(viii) he has executed an enforceable guarantee in favour of a person who is a creditor to a defaulter undergoing a resolution process,
(ix) connected to any such person mentioned above (including promoters or people in control of the defaulting firm during the implementation of the resolution plan), or
(x) indulged in any of these activities outside India.
Approving resolution plan:
The Code also specifies that the committee of creditors should consent to a resolution with majority 75%. The Ordinance amends this provision to state that the committee will consent to this resolution plan by 75% majority subject to any other conditions specified by the Insolvency and Bankruptcy Board.
The Ordinance disallow the committee from approving a resolution plan submitted before the declaration of this Ordinance. If plan is submitted by a ineligible person.
Insolvency professional can sell out the movable or also immovable property of the debtor in case of liquidation. The Ordinance disallows the insolvency professional to sell this property to any ineligible.
The Ordinance inserts a provision to specify that any person who fails to comply with the provisions of the Code will be punishable with a fine ranging between one lakh rupees to two crore rupees.