10 Things to Know About the New Bankruptcy Code
BANGALORE: Despite GST setback, the current government gears up to bring reforms as it presented the bankruptcy bill in Lok Sabha. The Finance Minister Arun Jaitley introduced the new bill which would aid the sick companies in winding up their businesses.
The new bill is expected to replace the current laws on bankruptcy and looks forward to make investor’s exit simpler. It will be officially called the Insolvency and Bankruptcy Code 2015. This reform was much needed to improve the ease of doing business in the nation.
Here’s all you need to know about the new Bankruptcy Code, reports NDTV.
1. The Insolvency and Bankruptcy Code 2015 is the biggest reform since the introduction of the Goods and Service Tax.
2. As per the World Bank, India’s insolvency will take 4.3 years to get resolved which twice of the time taken by China. However, the introduction of this code will bring down the tine to less than a year.
3. The current average recovery sums up to just quarter to the dollar which lists down amongst the other similar economies.
4. The current process for taking a decision for either saving or liquidating a company is much time consuming under the existing laws. This allows the managers to withdraw investments from the ailing company.
5. The introduction of this new code on bankruptcy will lead to a decision in 90 days for fast track applications and 180 days for normal ones. The insolvency expertise will operate under the passed law.
6. The existing law, reference to the Sick Industrial Companies Act of 1985 mostly leads to virtual paralysis as wind-up order is appealed to follow in order to revive companies.
7. The new Bankruptcy Code follows that revival of the companies is not the only result.
8. For the first time deadline will be imposed under this law thereby setting up a network of insolvency expertise to ease the workload and manage delays.
9. Under the new code, the Official Liquidator will be replaced by system of registered insolvency practitioners involving a regulatory body.
10. The new code is expected to be passed by the Budget Session of Parliament.