Bankruptcy law to improve ease of doing business

New Delhi

Seeking to improve ease of doing business, government on Monday introduced in Parliament the ‘Insolvency and Bankruptcy Code, 2015’ that provides for resolution of insolvency in a timebound manner.  

 It also provides for setting up of a ‘Insolvency and Bankruptcy Board of India’ to regulate professionals, agencies and information utilities engaged in resolution of insolvencies of companies, partnership firms and individuals.   

 “The Code proposes to establish a fund to called the Insolvency and Bankruptcy Fund of India...,” said the statement of objects and reasons of the bill tabled in Lok Sabha by Finance Minister Arun Jaitley. It further said that a new legislation was needed to deal with insolvency and bankruptcy as the existing framework is “inadequate, ineffective and results in undue delays in resolution”.   
 
 As per the proposed legislation, the corporate insolvency would have to be resolved within a period 180 days, extend able by a further 90 days. It also provides for fast-track resolution of corporate insolvency within 90 days.

Currently, there is no single law dealing with insolvency and bankruptcy. Liquidation of Companies is handled by the High Courts, individual cases are dealt with under the Presidency Towns Insolvency Act, 1909 and Provincial Insolvency Act, 1920. It also seeks to balance the interest of all the stakeholders including alteration in the priority of payment of government dues.