Nirmala Sitharaman tabled the bill in the Lok Sabha, which amends the Insolvency and Bankruptcy Code, 2016
The Lok Sabha on Wednesday passed the Insolvency and Bankruptcy Code (Amendment) Bill, 2021 which was introduced in the Lower House on July 26.
Union Corporate Affairs Minister Nirmala Sitharaman tabled the bill in the Lok Sabha, which amends the Insolvency and Bankruptcy Code, 2016. The Bill replaces the Insolvency and Bankruptcy Code (Amendment) Ordinance, 2021, which was promulgated on April 4, 2021.
The Bill introduces an alternate insolvency resolution process for micro, small, and medium enterprises (MSMEs), called the pre-packaged insolvency resolution process (PIRP).
The Code provides a time-bound process for resolving the insolvency of corporate debtors (within 330 days) called the corporate insolvency resolution process (CIRP). The debtor himself or its creditors may apply for initiation of CIRP in the event of a default of at least one lakh rupees. Under CIRP, a committee of creditors is constituted to decide on the insolvency resolution. The committee may consider a resolution plan which typically provides for the payoff of debt by merger, acquisition, or restructuring of the company. If a resolution plan is not approved by the committee of creditors within the specified time, the company is liquidated. During CIRP, the affairs of the company are managed by the resolution professional (RP), who is appointed to conduct CIRP.
Meanwhile, the Appropriation Bill (No. 3), 2021 authorizing the government to draw funds from the Consolidated Fund of India to meet the amounts spent on certain services during the financial year ended on the 31st day of March 2018, in excess of the amounts granted for those services and for that year has also been passed in the Lok Sabha.