Budget 2023: The Ministry of Corporate Affairs has consulted judges, lenders, bankruptcy resolution professionals and other stakeholders to revamp the Insolvency and Bankruptcy Code.
The preparations for Union Budget 2023 are underway in full swing. As per updates, the government is reportedly likely to revamp the Insolvency and Bankruptcy Code (IBC). This step is expected to be taken to fix the weaknesses that are witnessed in bankruptcy proceedings and for faster resolution to distressed companies.
According to a Livemint.com report, the Ministry of Corporate Affairs has consulted judges, lenders, bankruptcy resolution professionals and other stakeholders on the issue under consideration. It adds that based on these consultations, a set of formal proposals is awaited from these people.
In addition to this, the Livemint.com report also says that a Bill to overhaul the Insolvency and Bankruptcy Code is expected to be tabled in the Parliament during the budget session.
If things go as per plan, the proposed Bill to revamp the Code is expected to have measures to improve problems related to domestic insolvency regime as well as have provisions to introduce a cross-border insolvency regime.
However, one of the main concerns for policy makers is that the professionals, who are usually hired to run the company as a stop gap arrangement and to render bankruptcy resolution, are usually not industry experts. Because they are not crowned the latter, their longer stay at the company, usually doesn’t add any value to the operational performance of the business, as per the report.
Hence, the government is reportedly considering revamping the entire Insolvency and Bankruptcy Code in an attempt to address all requirements in one go. Till date, the Insolvency and Bankruptcy Board of India (IBBI) has modified several rules across areas to make the resolution relatively easy. However, Outlook couldn’t independently verify the details.