Centre proposes amendments in IBC

NEW DELHI: The government will bring about “necessary amendments” in the Insolvency and Bankruptcy Code (IBC) to enhance corporate resolution and facilitate cross-border insolvency processes, finance minister Nirmala Sitharaman proposed in the Budget on Tuesday.

“Necessary amendments in the code will be carried out to enhance the efficacy of the resolution process and facilitate cross-border insolvency resolution,” Sitharaman said while presenting the Budget.

The government had suspended the initiation of the corporate insolvency process under IBC for one year from March 25, 2020, to March 24, 2021, to provide relief to firms undergoing stress due to the pandemic. It also increased the minimum threshold for the insolvency process from ₹1 lakh to ₹1 crore.

A pre-packaged insolvency resolution process was introduced under IBC as an alternative insolvency resolution process for corporate micro, small and medium enterprises in April 2021.

The code has opened possibilities of resolution, including merger, amalgamation and restructuring of any kind, besides opening opportunities to a host of professional service providers, the government said in the Economic Survey 2021-22 a day earlier.

As many as 421 CDs (corporate debtors) were rescued as of September 30, 2021, through resolution plans while a total of 1,419 CDs were referred for liquidation. In value terms, around 74% of distressed assets were rescued.

The resolution of these 421 cases helped recover ₹2.55 lakh crore against total debt of ₹7.94 lakh crore, reflecting a success rate of over 32%.