Finance Minister Nirmala Sitharaman proposes amendments in the Insolvency & Bankruptcy Code (IBC) structure to promote cross-border insolvency resolutions. This much-needed step will pave the way for the faster resolution of debt-ridden companies.
The budget also proposes the speed up of voluntary winding up of companies.
“Necessary amendments will be made in the IBC for more efficient dispute resolution and enable cross-border insolvency resolution,” said Nirmala Sitharaman in her budget speech.
As per the latest report by the Insolvency & Bankruptcy Board of India (IBBI), since the inception of the IBC, a total of 4708 Corporate Insolvency Resolution Process (CIRP) cases have commenced by the end of September 2021. Out of these companies, 421 completed approvals of the resolution plan.
Much talked, cross-border insolvency rules, once operational as law, will allow lenders to recover dues from defaulting borrowers disposing of foreign assets and promoters’ personal assets parked in offshore locations.
These rules about cross-border insolvency are expected to be framed on the United Nations Commission on International Trade Law (Uncitral) lines.
According to the latest economic survey, the corporate debtors (CDs) rescued had assets valued at Rs 1.48 lakh crore, while the CDs referred for liquidation had assets valued at Rs 0.52 lakh crore when they were admitted to Corporate Insolvency Resolution Process (CIRP).
