Insolvency code: Govt to ask panel to review amendments

MUMBAI: The government has decided to ask a panel it formed in November to review provisions of the Insolvency & Bankruptcy Code (IBC) to also review a later amendment prohibiting defaulting promoters and related entities from bidding for their assets, two people aware of the matter said. The panel chaired by secretary, Ministry of Corporate Affairs, which also includes members involved in the drafting of IBC, met on Friday.

Coincidentally, the Punjab and Haryana High Court on Friday issued a notice to the Centre over the amendment. Suman Jolly, MD of Punjab-based Recorders and Medicare Systems Pvt Ltd had challenged the ordinance on the ground it would have retroactive effect, and that it does not distinguish between ordinary and wilful defaulters.

The court will hear the matter on January 25.

“The panel will help the government in relooking at some of the contentious issues in the ordinance which have been highlighted by the industry,” said the first person of the two persons cited above.

An email sent to MCA on Monday was not answered till press time.

This comes at a time when industry experts had expressed concerns that the ordinance may shut out even clean bidders, possibly those promoters who have blood relations with tainted promoters and private equity players who acquire stressed assets.

“There is little bit of interpretation issue on the drafting of the ordinance which I think the government is proactive enough to seek a feedback and tweak it,” said Manish Aggarwal, partner and head, resolutions, special situations group, KPMG India, told Mint at a recent event.

Banks have referred 12 large borrowers for insolvency proceedings following the June 13 directive of RBI.

The central bank has set a December 13 deadline for another set of accounts, where lenders must finalise a resolution plan, failing which they have to take these borrowers to National Company Law Tribunal.