Bankruptcy Code (Amendment) Bill 2021: Finance Minister Nirmala Sitharaman on 26th July 2021 introduced Insolvency and Bankruptcy Code (Amendment) Bill 2021 in Lok Sabha.
Note: Nirmala Sitharaman is in charge of both finance and corporate affairs ministries.
- The Insolvency and Bankruptcy Code (Amendment) Bill, 2021 was introduced amid Opposition ruckus over various issues.
- The amendments seek to remove bottlenecks and streamline the corporate insolvency resolution process, wherein successful bidders will be ring-fenced from any risk of criminal proceedings for offenses committed by previous promoters of companies concerned.
- The bill has been introduced to amend the insolvency law and provide for a pre-packaged resolution process for stressed MSMEs.
- The Insolvency and Bankruptcy Code (Amendment) Bill, 2021 will replace the ordinance that was promulgated on April 4 by President Ram Nath Kovind on April 4 to amend the Insolvency and Bankruptcy Code (IBC), 2016 to offer a pre-packaged bankruptcy resolution scheme for small, micro, and medium businesses under the Code.
- Generally, under a pre-packaged process, main stakeholders such as creditors and shareholders come together to identify a prospective buyer and negotiate a resolution plan before approaching the National Company Law Tribunal (NCLT).
- All resolution plans under the IBC need to be approved by NCLT.
- The Insolvency and Bankruptcy Code, which came into force in 2016, has already been amended thrice.
- The Insolvency and Bankruptcy Code, 2016, sought to create a single law for bankruptcy and insolvency.
- The latest changes pertain to various sections as well as the introduction of a new section.