Govt moves amendments to key insolvency bill

The government on Monday introduced amendments to a key insolvency bill in the Lok Sabha that seeks to treat home buyers at a par with financial creditors in legal rights of insolvent firms. The Opposition, however, charged that the bill was being brought to help “one industry”.

The Insolvency and Bankruptcy Code (Second Amendment) Bill, 2018, was introduced by Finance Minister Piyush Goyal. The bill replaced the Ordinance which was approved by the Union Cabinet in May.

"The Ordinance brought by the government lowers the minimum vote requirement for passing the resolution to 66% from 75% in the original act. This is nothing but a fixed match. It is a clear case of crony capitalisation and loot of public money," BJD MP Bhartruhari Mahtab said.

Goyal termed the allegations baseless and said the law would not adversely impact anyone. He said the government had gone for amendment of the law only after a consensus in Parliament about the same.

The bill also provides for inserting an explanation under Section 5 clarifying that any amount raised from an allottee under a real estate project shall be deemed to be an amount having a commercial effect of borrowing.

It also allows the withdrawal of a resolution application submitted to the National Company Law Appellate Tribunal (NCLAT) under the code on an application made by the applicant with the approval of 90% of voting shares of the committee of creditors.

The amendment also proposed relief for small and medium companies and exempted them from various provisions in the dispute resolution process in which barring wilful defaulters, the owners of MSMEs can bid for their own companies in the resolution process. This will help their turn around at a faster rate.