The new Insolvency and Bankruptcy Bill, 2015 tabled in the Lok Sabha on Monday marks quite a few salutary changes to the existing legislation on bankruptcy and insolvency. Perhaps the most significant change is that it proposes to ect a single bankruptcy code and to set deadlines for processing insolvency cases. The proposed law aims to reduce delays in resolution of insolvency cases and to improve recoveries of amounts lent to companies. The new bankruptcy code will also help India in the World Bank’s Ease of Doing Business ranking. At present India is ranked 136 on this count in 189-country ranking. The current set of competing codes on the matter often results in the bankruptcy process dragging on for years, thus inflating costs for the parties concerned. Resolving a bankruptcy case can take on an average over four years in India. The proposed legislation consolidates into a single law a host of legislations that deal with the subject. It allows operatiol creditors like employees to also call for the insolvency resolution. It proposes an insolvency regulator to exercise regulatory oversight over insolvency professiols, insolvency professiol agencies and informatiol utilities. It also moots two separate Insolvency Adjudicators—one with jurisdiction over companies and the other over insolvency and bankruptcy resolution of individuals. It proposes fast tracking resolution of insolvency cases and improvement of recoveries of amounts lent to companies with a timeline of 180 days extendable by 90 more days. It also moots a “fresh start” process for indigent individuals with income and assets less than specified thresholds. After all this, we should be able to look forward to a dispensation that does not hold the rights of creditors to ransom or permit entrepreneurs to eventually loot companies they create by falsely declaring themselves as insolvent and depriving their creditors.
The New Bankruptcy Bill