The Insolvency and Bankruptcy Code, 2016 (Code), was a landmark legislation consolidating the regulatory framework governing the restructuring and liquidation of persons (including incorporated and unincorporated entities).
The report "Insolvency and Bankruptcy Code 2016 - Evolving Dynamics" mentions that since the implementation of the code, a total 818 corporate cases were admitted to NCLT till last week of May 2018. Out of which, 104 cases were closed by commencement of liquidation and 25 cases were closed by approval of resolution process. So the ratio of firms facing liquidation to resolution is 4.2: 1, which is antithesis of the Insolvency and bankruptcy code.
Why are more firms going for liquidation? Many reasons, some of which are poor recovery of creditors money from the resolution plans received, non-cooperation from corporate debtor, failed to received resolution plan within the statutory time limit, many SME and MSMEs are under liquidation, where there is no interest among the investors other than its promoters, who were not allowed to invest in own companies.
This report covers the Important amendments suggested by Law committee
1. Home buyers to be treated as financial creditors
2. Recalibration of the voting threshold for decisions of the committee of creditors
3. Resolution Professional to continue management even after expiry of CIRP period till NCLT takes a decision on the resolution plan
4. Withdrawal of an insolvency application post admission
5. Applicability of Limitation Act
6. Relaxation in section 29A
This report was launched at the Conference on Insolvency and Bankruptcy Code: Evolving Dynamics held on 9 June 2018 in Kolkata.