The Insolvency and Bankruptcy Code (Amendment) Ordinance, 2020 and The Insolvency and Bankruptcy Code (Second Amendment) Bill, 2020

Sir, i would like to make this submission in two parts. The first part is about the amendments which have been brought in, and the second part is about the IPC code in general. Sir, talking about the first part, if you took at paragraph 2 of the statement of objects and reasons, you would find that it is very good and very strong in intent. It is a great measure that has bee taken. There are only two elements there. One is that it has been linked to a time-frame; the second one is that it is available to everybody. Now, if you look at the departmental data of number of CIRPs initiated as of 30th June, 2020, 260 such cases were initiated by the corporate debtors themselves. Now, this particular thing is prevented because of insertion of Clause 10(a). I think, this would only lead to erosion of the value of the company, which is going into the resolution process. Secondly, out of the 3922 CIRPs initiated, 1961 were from operational creditors, mostly MSMEs. Now, what do they do? The third aspect is, linking it to a time-frame and not to pandemic-related stress. If you look at paragraph 2 of the statement of Objects and Reasons, it talks about pandemic-related stress. If you look at the Government of India's assessment of the GST compensation, there was an element of compensation or compensation arising out of the pandemic and another one for other reasons like the economic condition. If the government could decipher this particular thing, I am sure the pandemic-related stress could have been deciphered instead of keeping it panning to about a one-year period. What happens after the one year-period? These are some of the questions arising out of clause 10(a), which have been elaborately dealt with by the previous speakers. The other element is : what happens to people who are dependent on global business or demand business, like our export oriented units? Now, there the condition would improve probably after a period of one year or may be two-three years. Would it be necessary to come in with an amendment even later? Having said so, I must also say, Sir, that the IBC has been fairly successful since 2016. There are 240 cases resolved, 44 percent is the recovery, but my question is, if there is an insolvency law committee, which is in operation since 2017, what was need for coming in with three Ordinances rather than a regular process of bringing in changes as it is an evolving law? Also, the Finance Minister could think about the pre-pack arrangement, the hybrid arrangement, in which the corporate debtor and the committee of creditors reach an agreement even before coming to the resolution. So, this could be done uder Section 240A of the code. I believe this is work in progress. If it is expedited, I think that would help the ecosystem much better. Thirdly, would it be possible that section 29A is tweaked at this point of time to give one window to the non-willfulcorporate promoters who want to get into an arrangement to save their company? The last point that i would like to submit is that the quality of resolution has to be improved. Even though the IBBI has been doing well, I still feel that the quality of resolution, which is dependent on the people who are selected as resolution professionals, has to be improved. It is not necessarily sufficient to jiiust train them but not really evaluate their performance. That is something that is required to improve the ecosystem everywhere.

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