Cabinet approves Ordinance on insolvency code

The Union Cabinet on Wednesday approved promulgation of an Ordinance to stop willful defaulters from buying back stressed assets to prevent the misuse of the Insolvency and Bankruptcy Code.

The code, which became operational in December last year, provides a market-determined and time-bound insolvency resolution process. Over 300 cases have already been approved by the National Company Law Tribunal (NCLT) to be taken up under the law, implemented by the corporate affairs ministry.

Briefing reporters after the Cabinet meeting, Finance Minister Arun Jaitley said some changes were proposed in the Code and it was being done by way of an Ordinance.

He did not divulge specific details about the proposed ordinance.

"The whole process (about the ordinance) is at an advanced stage and therefore you want the process to go on the right track," Jaitley said responding to question on why the government had opted for the Ordinance route when the Winter Session of Parliament was to be convened next month.

The Ordinance comes at a time when there are concerns in certain quarters about various aspects of the Code, including the possibility of promoters wresting back control of a company under the insolvency process.

"It will be tabled in Parliament during the Winter Session," Jaitley said.