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President Ram Nath Kovind has given approval to ordinance for amending the Insolvency and Bankruptcy Code (IBC). Now, the ordinance will be presented in the winter session of Parliament.
The ordinance prevents wilful defaulters or promoters with some history of defaulters from bidding for their own or other stressed assets at a discount. It will prevent misuse of IBC as the defaulters are also prohibited from submitting a resolution plan.
The Ordinance amends sections 2, 5, 25, 30 and 240 and has added 2 new sections: 29A and 235A.
The new section 29A, makes certain persons ineligible to be a Resolution Applicant and it includes wilful defaulters, those who have their accounts classified as Non-Performing Assets (NPAs) for one year or more and are not able to settle dues and interest thereon and those who have executed an enforceable guarantee in favour of a creditor, in respect of a corporate debtor.
The other new section 235A, provides for punishment for contravention of the provisions where no specific penalty is provided. The punishment is fine which shall not be less than Rs.1 lakh, but which may extend to Rs.2 crore.
