The President of India on 23 November 2017 gave his assent to an amendment in the Insolvency and Bankruptcy Code 2016. The key highlights of Ordinance are as below:
- The Ordinance provides an amendment to the definition of “Resolution Applicant” along with Section 25 of the Insolvency and Bankruptcy Code 2016 empowering Committee of Creditors (COC) to decide who may or may not submit a resolution plan having regard to the complexity and scale of operations of the business of the corporate debtor.
- The Ordinance provides for insertion of Section 29 A barring defaulting promoters from being able to submit a resolution plan and regain control.Section 29 A prohibits 8 categories ‘persons’, including wilful defaulters and persons with NPAs for over a year, from submitting a resolution plan, including the ‘connected persons’ to any of these 8 categories have also been barred from applying as resolution applicants, the connected persons being promoters or a related party.
- The Ordinance amends Section 30 of the Insolvency and Bankruptcy Code 2016 providing that COC may approve resolution plan by a vote of not less than 75 % of the voting share of the financial creditors, after considering its feasibility and viability and such other requirements as may be specified by the Board. Amended Section 30 gives authority to COC to choose resolution plans as per its own discretion.
- The Ordinance amends Section 35 by inserting clause (f) in subsection (1) prohibiting a liquidator from selling an immovable or immovable property or actionable claims of the corporate debtor in liquidation to any of the 8 categories ‘persons’ and connected persons.
- The Ordinance provides for insertion of section 235 A providing that in case of the contravention of Code/Rules/ Regulations by any person made thereunder for which no penalty or punishment has been prescribed under the Code, such person shall be punishable with the fine which shall not be less than Rupees 1 Lakh which may extend to Rupees 2 Crore.