Corporate Affairs ministry considering multiple changes to Insolvency and Bankruptcy Code
The govt wants to ensure the process doesn’t allow a failed promoter to regain control while escaping liabilities.
NEW DELHI: The corporate affairs ministry is considering multiple changes to the Insolvency and Bankruptcy Code, including ways of ensuring that the process doesn’t allow a failed promoter to regain control while escaping liabilities.
The review is being conducted after seeing how the law has worked in the past few months and based on feedback received, said senior officials. A simpler framework for resolving individual insolvencies to allow matters to be handled by a mediator when there is no dispute is one such suggestion.
Bankers have pointed out that under the current law a founder could possibly get back the reins of a company. “The promoter should not be able to buy his own firm through a shell company after the insolvency proceedings,” a senior bank executive said.
The government has also received a suggestion to make the code more comprehensive to cover entities such as trusts, societies and Hindu Undivided Families (HUFs) as well.