Slew of laws likely to fix insolvency

PAST YEAR SAW A SLOWING OF RESOLUTION PACE, SUPREME COURT INTERVENTION

- PRIYANSH VERMA

The coming year will likely see significant changes to the insolvency resolution regime for better operational efficiency and output, in a break from the slowdown seen in the past year.

The Insolvency and Bankruptcy Code (Amendment) Bill is expected to be tabled in Parliament early next year. Key features of the Bill include the introduction of group insolvency, cross-border insolvency provisions and a creditor-led resolution process (CLRP). The Bill may also remove interim moratorium provisions for personal guarantors' assets.

The CLRP would be similar to the pre-packaged scheme for MSMEs and will be initiated by the financial creditors, after the occurrence of default by the corporate debtor (CD), but with minimum interference of the adjudicating authority (AA).

Going forward, experts say the changes suggested in the IBC by the MCA in its discussion paper, dated January 18, 2023, should be brought in as quickly as possible.

Siddharth Srivastava, partner at Khaitan & Co said that the proposal for increased reliance of information utilities for admission of CIRP applications, introduction of project-wise insolvency in law, mandating use of challenge mechanism, provisions for group insolvency should be introduced soon.