Mumbai: The government has set up a 14-member committee to review and improve the implementation of the insolvency and bankruptcy code (IBC) a year after it came into being.
The committee, led by the secretary at the ministry of corporate affairs (currently I. Srinivas) includes Insolvency & Bankruptcy Board of India chairman (IBBI) M.S. Sahoo, representatives from the Reserve Bank of India and the department of financial services and other experts, a notification on the ministry’s web site said.
The committee will look into issues that impact the efficiency of the corporate insolvency resolution and the liquidation framework and also prescribe recommendations to improve the functioning of the code, the notification said.
The review comes at a time when as many as 300 cases have already been admitted by the National Company Law Tribunal for resolution under the code. Of these, 11 account for nearly 25% of the total bad loans in Indian banking and were referred by the RBI for immediate bankruptcy proceedings in June this year.
The committee will look at some of the key issues that threaten to slowdown the implementation of the code, said a person aware of the matter.
This includes protecting the rights of nearly 25,000 home buyers in the case of Jaypee Infratech, allowing promoters to bid for their own company and the merger control threshold limit in case of potential investors bidding for stressed assets referred to NCLT. It will also look into the issue of levying Minimum Alternative Tax (MAT) on investment in stressed assets, the person cited above.
On 8 November, IBBI amended its regulations to ensure that lenders take into account the background, credit worthiness and credibility of bidders, including promoters, as part of their due diligence before clearing a turnaround plan.
Separately, markets regulator Securities and Exchange Board of India (Sebi) on Friday said it was working on guidelines for insolvency resolution professionals under capital market norms for effective implementation of the insolvency code. The market watchdog is jointly working with the Insolvency and Bankruptcy Board to address the issue and the new guidelines will be issued this year itself, Sebi chairman Ajay Tyagi said.
“There are various other issues which have come to our notice in terms of resolution professionals being in-charge of a company for 180 days at least, when resolution plan is underway," Tyagi said on the sidelines of BSE’s conference on the Insolvency and Bankruptcy Code.
“What would be the obligations on the resolution professionals under the listing regulations or what are the other requirements. They need to be jointly worked out with the Bankruptcy Code Board of India and provisions made on that," he added.