The government has designed an ordinance to prevent wilful defaulters and other ineligible persons from taking control of stressed assets. According to Corporate Affairs Minister Arun Jaitely, the ordinance will bring changes in the Insolvency and Bankruptcy Code (IBC).
Previously, several experts have pointed out loopholes in the existing IBC format where the option for the owner defaulter or other disqualified persons taking stake in the stressed company.
As per ordinance, a resolution applicant is not eligible if he or she is an un-discharged insolvent, willful defaulter, account classified as NPA by RBI, indulged in preferential transactions, disqualified to be a director of a company under the Companies Act, prima facie found guilty of willful default or convicted of fraud and default.
The Ordinance is expected to be table during the winter session of the Parliament.
IBC is the instrumental legislation that may trigger critical resolution process for the mammoth stressed assets. The Act that became effective from December 2016 is used by the RBI to enforce stressed asset resolution in the banking system.
Tags : bankruptcy law amendment