Bankruptcy Code presented today as Money Bill. No need to go to Upper House for their approval. Upper house can just discuss, will be treated as passed after 14 days.
Here’s a cheat-sheet on Bankruptcy Code:
1) The Bankruptcy Code is considered to be the biggest reform measure after Goods and Services Tax.
2) According to the World Bank, it takes 4.3 years on average – twice as long as China – to resolve insolvency in India. The new Bankruptcy Code seeks to cut down the time to resolve insolvency to less than a year.
3) The average recovery in India is just quarter to the dollar, one of the worst among similar size economies.
4) Under current bankruptcy rules, even deciding whether to save or liquidate an ailing company can take years, enabling managers to divest assets from the company.
5) Under the new Bankruptcy Code, a decision to liquidate a company would have to be reached in 180 days – even 90 days for fast-track applications. The management is displaced by insolvency professionals under the proposed law.
6) Current legislation – especially the Sick Industrial Companies Act of 1985 – is geared towards reviving companies, so appeals frequently follow a wind-up order, resulting in virtual paralysis.
7) Under the new Bankruptcy Code provisions, revival of the companies is not considered to be the only solution.
8) The new Bankruptcy Code will impose deadlines for the first time and establish a network of insolvency professionals to lighten courts’ workload and tackle delays.
9) Proposed changes will scrap the Official Liquidator and introduce a system of registered insolvency practitioners, with a regulatory body, working under a company law tribunal.
