Insolvency and Bankruptcy Bill 'maximises benefits' for MSMEs says Finance Min

In support of the insolvency and bankruptcy code, Union Minister of Finance, Nirmala Sitharaman on Wednesday said that the passage of the Insolvency and Bankruptcy Code Amendment Bill, 2021 enables an efficient alternative insolvency resolution framework for micro, small and medium enterprises (MSMEs).

Finance Minister praises Insolvency and Bankruptcy Bill

In a series of tweets, she emphasised that the bill consists of both formal and informal solvency proceedings and that will benefit various stakeholders. "Salient features of the Insolvency and Bankruptcy Bill include - Pre-pack for MSMEs which blends elements & virtues of both formal and informal insolvency proceedings," she said.  

Another salient feature of the bill is that it provides for a pre-packaged insolvency resolution mechanism especially for micro, small and medium enterprises. Highlighting other characteristics of the bill, Union Finance Minister took to Twitter and wrote that the bill enables the guidance and oversight of the resolution professionals and the process becomes more smooth, flexible, quicker and cost-effective. 
 

In a series of tweets Nirmala Sitharaman’s office wrote, "Other features of the Insolvency and Bankruptcy Code (Amendment) Bill, 2021 include: - Guidance and oversight of the resolution professional - Finality of the process, with judicial approval. A process that offers flexibility - Quicker, cost-effective, and value-maximizing outcomes for all stakeholders. " The Insolvency and Bankruptcy Code (Amendment) Bill, 2021 was passed by the Lok Sabha on July 28 and by the Rajya Sabha on Tuesday following a brief discussion amid ruckus.  The Insolvency and Bankruptcy Code, 2016, was the bankruptcy law of India that sought to consolidate the existing framework by creating a single law for insolvency and bankruptcy. The ordinance to amend the Insolvency and Bankruptcy Code (IBC) was promulgated by President Ram Nath Kovind on April 4, to offer an alternate bankruptcy resolution scheme for small businesses. 

Insolvency and Bankruptcy Code (Amendment) Bill, 2020

The Insolvency and Bankruptcy Code (Second Amendment) Bill provides a speedier, cost-effective, semi-formal and less disruptive framework for insolvency resolution of corporate debtors in distress. Replacing the Ordinance, which was promulgated on June 5 2020, this Code allows creditors of the company or the company itself to initiate insolvency proceedings for any defaults arising before March 25, 2020, according to PRS. 

The Code prohibits either the company or its creditors to file for insolvency for defaults arising during the six months from March 25, 2020. Moreover, under this Code, a director or a partner of the corporate debtor may be held liable to make personal contributions to the assets of the company for wrongful trading, explains PRS.

(With ANI Inputs) 
Image: PTI