Cabinet approved to amend the Insolvency and Bankruptcy Code, to prevent wilful defaulters from bidding for stressed assets.The finance ministry had earlier asked banks to ensure that wilful defaulters were prevented from buying same stressed assets as Some owners are reported to be getting ready to stake a claim for these assets when they are put up for sale by the creditors.
The IBC sent the message to big companies that default is a dangerous situation to be in. But promoters wresting back control of entities after banks take a big haircut would be politically very controversial and an influential section in the government is keen to prevent this from happening. The Ministry of Corporate Affairs is closely looking at the pros and cons of the issue as a number of cases have been taken up for resolution. The changes may be introduced as early as the next session of Parliament.
The Insolvency and Bankruptcy Board of India (IBBI) has recently amended regulations governing corporate insolvency resolution process to ensure that antecedents, credit worthiness and credibility of a resolution applicant, including promoters, are taken into account by the Committee of Creditors.The IBC is one of Prime Minister Narendra Modi's biggest reforms.