IBC bill passed in Rajya Sabha, now insolvency action will be taken against companies, guarantors
New Delhi. Finance Minister Nirmala Sitharaman said on Saturday that the Insolvency and Bankruptcy CodeUnder the (IBC), insolvency action can be taken against the companies defaulting in loan payments and personal guarantors. Sitharaman said this while replying to the discussion in the Rajya Sabha on the Insolvency and Bankruptcy Disability Code (Second Amendment) Bill, 2020. The bill was passed by voice vote in the Rajya Sabha. The bill will replace the ordinance brought in June in this regard. On the issue being raised by some members, Sitharaman said, "Sometimes there are some guarantors towards companies taking loans. In such a situation, for large corporate bankruptcy solutions and liquidation, we believe that, as far as possible, Insolvency action should be taken against the corporate debtor and its guarantor simultaneously. 'The government brought an ordinance in June to amend the IBC. Under this, a provision was made that no new bankruptcy action would be started from March 25 for six months due to the corona virus epidemic. The lockdown was imposed on 25 March to prevent the spread of corona virus in the country.
The Finance Minister made it clear that action will continue against the companies defaulting in debt payments before March 25 as part of the insolvency process. He said that such companies will not get relief from this amendment. Asked by the members what was the hurry to bring this ordinance first, Sitharaman said, "If there is a demand for ground situation between different sessions, then there is a need to bring an ordinance. The obligation of a responsible government is to use the ordinance to show that it is with the people of India. 'The finance minister said that due to the situation caused by the epidemic, there was a demand for immediate steps and the ordinance for that. The method was chosen. The Finance Minister said that the government brought the bill in the next session to make the ordinance a law. Sitharaman said that companies are facing a crisis due to Kovid-19. He said, "In this way we have section 7, 9, IBC Decided to postpone 10. This enabled us to save companies going bankrupt due to extraordinary circumstances. 'Sections 7, 9 and 10 of the IBC relate to the insolvency insolvency process initiated by a financial lender of a company to lenders for operations. . The minister said that IBC is now an important part of the business. Giving some statistics, he said that so far IBC has done well.
Referring to the data on non-performing assets (NPAs) of commercial banks for the financial year 2018-19, Sitharaman said that 5.3 per cent of loans were recovered through Lok Adalats. 3.5 percent was recovered through Debt Recovery Tribunals (DRTs) and 14.5 percent through Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act (SARFAESI). He said that there was a recovery of 42.5 percent through IBC. He said that the objective of IBC is to keep the companies moving, not to liquidate them. He said that 258 companies could be saved from liquidation through the IBC process. At the same time 965 companies went through the process of liquidation. The Finance Minister said that the 258 companies which were spared the liquidation had total assets of Rs 96,000 crore. On the other hand, the valuation of assets sent for liquidation is 38, 000 crores. Sitharaman said that in terms of value, the assets saved from IBC are two and a half times the assets with liquidation. IBC came into force in December 2016. So far it has been amended five times.