Bankruptcy Code Gets RS Nod

The Rajya Sabha gave its assent to the new bankruptcy code, almost a week later after it was passed by the lower house of the Parliament, clearing the law that provides for speedy resolution of bankrupt businesses.
The bill seeks to bring a host of regulatory changes to build a robust and faster insolvency resolution mechanism besides setting up of an Insolvency and Bankruptcy Board of India. Under the new code, employees and workmen will have first right during liquidation of assets under the law followed by secured creditors.
“History is written today as Rajya Sabha passes Bankruptcy Bill!,“ minister of state for finance Jayant Sinha, who piloted the bill in the house, tweeted after the bill was passed late by Rajya Sabha. Insolvency and Bankruptcy Code, 2015 had been passed by the Lok Sabha last week. The law will come into force when it receives president's assent.
The new law will provide an overarching framework for dealing with bankruptcies, replacing multiple laws dealing with the issue, including the Companies Act. It will cover individuals, companies, limited liability partnerships and partnership firms. “Bankruptcy code: it's a big day for economic reforms in India. The country moves ahead towards higher growth,“ economic affairs secretary Shaktikanta Das tweeted.
“Both Houses of Parliament passing the Bankruptcy Code.... this is huge. Combined with bank cleanup, potential game changer in long run,“ economist Sanjeev Sanyal said. The bill comes amidst mounting concerns over the nonperforming loans of the state run banks. The bankruptcy law is expected to quickly resolve bankrupt companies, protecting interest of all stakeholders.
According to the government data top 50 defaulters of public sector banks had exposure in excess of Rs.1.21 lakh crore as on December 2015.
The key features of the code includes hasten debt recoveries and restructurings by setting a deadline of 180 days to decide the fate of a company that defaults. If, however, 75% of creditors agree on a revival plan, that term can be extended by 90 days.