Q. Consider the following statements regarding proposed amendments in liquidation process-
- It was proposed by the insolvency and Bankruptcy board of India.
- The proposal includes capping revisions on bids to two times, banning unsolicited bids etc.
Which of the above statement/ s is /are true?
a) Only 1
b) Only 2
c) Both 1 & 2
d) None of these
ANSWER:- c)
RELATED FACTS:-
- The Insolvency and Bankruptcy Board of India has proposed major changes in the insolvency process.
- These changes are being brought about to increase transparency and address issues that have come up recently.
- Code of Conduct:-
- Among other things, a code of conduct has been introduced for the Committee of Creditors (CoC).
- The 31-point code of conduct requires creditors to disclose any conflict of interest, maintain full confidentiality and not try to adjust funds of the corporate debtor against their dues during the resolution process.
- However, it does not mention how violations in the code will be addressed.
- Amendments:-
- The proposed amendments include capping revisions on bids to two times, banning unsolicited bids and empowering the CoC to decide on the timeframe and thresholds for improvement on the resolution plan in advance.
- A separate paper on the liquidation process, the board has proposed that more powers should be given to the stakeholder’s consultative committee.
- Besides, the board plans to ban liquidators from appointing commission agents in the sale of assets.
- The changes come even as the government is proposing to amend the Act by introducing a pre-packaged insolvency resolution (PIRP) for small businesses.
By – ABHISHEK KUMAR