Insolvency and Bankruptcy Code (Amendment) Bill, 2021
Parliament passed Insolvency and Bankruptcy Code (Amendment) Bill, 2021, on August 3, 2021 after Rajya Sabha approved the bill amidst the protest.
- Bill was passed by Lok Sabha on July 28, 2021 and introduced in the Lower House on July 26 during the ongoing Monsoon session.
- Union Corporate Affairs Minister Nirmala Sitharaman had tabled the amendment bill that seeks to amends the Insolvency and Bankruptcy Code, 2016.
About Insolvency and Bankruptcy Code (Amendment) Bill
- Bill replaces the Insolvency and Bankruptcy Code (Amendment) Ordinance, 2021 that was promulgated on April 4, 2021.
- Recent amendment bill will provide for an alternate insolvency resolution process for micro, small and medium enterprises (MSMEs). This resolution will be called as “pre-packaged insolvency resolution process (PIRP)”.
- It will introduce a time-bound process to resolve issues of insolvency of the corporate debtors within 330 days. This process of resolution is called as Corporate Insolvency Resolution Process (CIRP).
- Under the CIRP, debtor or its creditors will be able to apply for initiation of CIRP in case there is default of Rs. 1 lakh.
- A committee of creditor will also be constituted under CIRP to decide on insolvency resolution.
- Committee of creditors might be considering a resolution plan to provide for payoff of debt by acquiring, merging, or restructuring the company. If the committee does not approve resolution plan within specified time, company will be liquidated.
Insolvency and Bankruptcy Code, 2016
This bankruptcy law of India was put forward in 2016 to consolidate existing framework by creating a single law for bankruptcy and insolvency. The code provides for solution to resolve bankruptcy and insolvencies timely in order to protect the interests of small investors and make the process of doing business simpler.