Report of the Insolvency Law Committee - Recommendation on implementation of the Insolvency and Bankruptcy Code, 2016 (IBC)

Posted On : April 09, 2018

The Insolvency Law Committee(Committee)was constituted by the Ministry of Corporate Affairs on 16th November, 2017 with the mandate to make recommendations on the issues arising from the functioning and implementation of the IBC, issues that may impact the efficiency of the of the corporate insolvency resolution and liquidation framework prescribed under the IBC andany other relevant matter as it deems necessary.
 
The Committee released its report on March 26, 2018 with the following key recommendations:
(a) Only persons which have contrbitued to the defaults of a corporate debtor or are otherwise undesirable to be rendered ineligible from submitting resolution plans under section 29A of the IBC.
(b) The Central Government to be allowed to exempt Micro, Small and Medium Enterprises from certain provisions of the IBC. 
(c) Home buyers to be treated as financial creditor with respect to real estate companies undergoing the corporate insolvency resolution process under the IBC.
(d) An explanation to be added to provide clarity with respect to the treatment of assets of the guarantors of a corporate debtor to be outside the moratorium.
(e) Recalibration of voting threshold for various decisions to be taken by a committee of creditors of a corporate debtor.
(f) NCLT shall be empowered to expand the scope of essential goods and services, on application filed by an interim resolution professional/resolution professional to keep the businessrunning as a going concern.
(g) A special resolution will be required to be passed by the shareholders of the corporate debtor, prior to initiation of the corporate insolvency resolution process under section 10 of the IBC.
(h) A time period of 1 year shall be allowed to obtain necessary clearances from government authorties for successful implementation of resolution plans.