The government is likely to shift the process of mediation for debt resolution to the Insolvency and Bankruptcy Code (IBC) so that negotiations between creditors and defaulting businesses are exclusively determined by bespoke provisions of the IBC, two people informed about the development said.
These matters currently fall under the purview of the Mediation Act of 2023. For the IBC to cover the process, however, it will have to be tweaked.
The Ministry of corporate affairs is likely to propose to the Law Ministry to notify the IBC that the debt mediation process will not to be covered under the purview of the Mediation Act.
That will enable a mediation regime to be built into the IBC ecosystem with a focus on meeting the goals of debt resolution-revival of the distressed businesses in the shortest possible time and salvaging the value of the assets.
The current process can be confusing for stakeholders, with multiple laws dealing with the same subject.
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