Union Cabinet Approvals and Legislative Changes
The Union Cabinet approved modifications to the Insolvency and Bankruptcy Code (IBC), Companies Act, and Limited Liability Partnership (LLP) Act based on recommendations from a parliamentary panel.
Insolvency and Bankruptcy Code (IBC) Bill
- The IBC Bill, initially presented by the corporate affairs ministry in August, was reviewed and its recommendations largely accepted by the Ministry of Corporate Affairs.
- The Bill includes significant reforms such as:
- A credit-initiated insolvency resolution process.
- A two-tier approval framework for resolution.
- Provisions for group and cross-border insolvency.
- Clarification that claims by state or central authorities require a contractual agreement to be treated as secured creditors.
- A clause allowing the transfer of assets from personal or corporate guarantors to lenders during insolvency resolution.
- The Bill aims to address systemic delays and promote cross-border insolvencies.
Companies Act and LLP Act
- Revisions aim to ease business processes and reduce compliance burdens.
- These Acts propose rationalization of various forms and further action towards decriminalization to enhance the ease of doing business.
Recommendations from the Parliamentary Panel
- Address delays at the adjudicating authority level more proactively.
- Implement stricter measures for resolution professionals to maintain integrity.
- Include a provision to prevent resolution professionals from becoming liquidators.
Union Finance Minister mentioned that the IBC Bill would be introduced in Parliament during the second half of the Budget session.
