- Lok Sabha on Tuesday passed the Insolvency and Bankruptcy Code (Second Amendment) Bill, 2018 that recognises home-buyers as financial creditors to real estate developers.
- The bill also proposes a special dispensation for small sector enterprises.
- The IBC Amendment Bill, 2018 now requires clearance from Rajya Sabba to replace the June 6 ordinance that sought to put these amendments into force to aid quick resolution of several bankrupt firms.
Key Features :-
♠) The bill says that homebuyers will get due representation in the committee of creditors (CoC) that takes a call on resolution proposals, making them an integral part of the decision making process.
♠) It also provides some reliefs for micro, small and medium enterprises (MSMEs). It does not disqualify promoter of an MSME firm from bidding for his enterprise undergoing corporate insolvency resolution process (CIRP), provided he is not a wilful defaulter and does not attract other disqualifications not related to default.
♠) According to the bill, Lenders will need to seek the prior approval of the competition regulator before finalising resolution plans. The measure seeks to prevent litigation that can derail the resolution process at a later stage. Currently, the winning bidder approaches Competition Commission of India (CCI) for clearance before formally taking over the asset.
♠) The amended code allows withdrawal of a resolution application with the approval of 90% members of the CoC. However, such withdrawal will only be permissible before publication of notice inviting expressions of interest (EoI). This means there can be no withdrawal once the commercial process of EoIs and bids starts