Bankruptcy code bill referred to joint House panel

The government on Wednesday referred the Insolvency and Bankruptcy Code, 2015 — which allows quick closure of ailing companies — to a 30-member Joint Select Committee of Parliament for further scrutiny.

The Code has been listed as ‘Money Bill’ which means it cannot be blocked by Rajya Sabha, once it is passed in the Lok Sabha.

Investors have been keenly waiting for the early rollout of the Code that also aims to improve the ease of doing business and attract more investment.

Ailing business
The Code will help India Inc to exit an ailing business, while banks stand to gain as they can recover their dues within a stipulated time. The Code proposes setting up of a regulator — Insolvency and Bankruptcy Board of India — for regulation of insolvency professionals, agencies and information utilities, along with an Insolvency and Bankruptcy Fund.

The joint committee will submit its report on the Code in the Budget session, Finance Minister Arun Jaitley said, while moving a motion in Lok Sabha. The committee will have 10 members from Rajya Sabha and 20 from Lok Sabha.

Once the Lok Sabha passes the bill, it will be sent to Rajya Sabha, which can only resort to three steps: Pass it, suggest changes or reject it — all these within 14 days.
In case, the Rajya Sabha suggests any change, the bill will go back to the Lok Sabha, which may or may not accept the suggestions.

While moving the bill for consideration and passage on Tuesday in the lower house, Jaitley had said he would consider sending the bill to the joint committee provided there was an agreement on the issue among the opposition parties.

Moving the resolution in the upper house of Parliament to refer the bill to the Joint Committee, Jaitley said the code aims at consolidating and amending “the laws relating to reorganisation and insolvency resolution of corporate persons, partnership firms and individuals in a time bound manner for maximisation of value of assets of such persons”.

It also seeks to promote entrepreneurship, make available credit and balance the interest of all the stakeholders by altering the order of priority of payment of government dues. The code proposes to establish an Insolvency and Bankruptcy Fund to deal with the insolvency issues.

Later talking to reporters, Minister of State for Finance Jayant Sinha said, “With the Joint Committee’s report in hand by the end of the first leg of the Budget session, our expectation would be to get the Bankruptcy Bill passed (in the second leg of the budget session).”