The government is ready to make further changes to the Insolvency and Bankruptcy Code if required, a senior official said today. While noting that the Code is a game changer, Corporate Affairs Secretary Injeti Srinivas also sought to dispel certain “myths” regarding the law, including provisions related to barring of wilful defaulters from the bidding process for stressed assets. The government is “more than willing to take any good suggestions and evaluate (them) and make further changes to the Code, if required”, he said here.
The Code, which comes under the corporate affairs ministry, has already been amended twice. “The IBC is the first major step on a long journey towards building a credit market in India that can support entrepreneurship, without compromising on financial stability,” Minister of State for Corporate Affairs P P Chaudhary said.
Noting that the Code has been able to meet stakeholders’ expectations to a great extent, he said the government is committed to strengthen the fabric of corporate structure. The Code gives creditors control over the resolution process, and the freedom to make commercial decisions without judicial intervention, he said.
“It (the Code) moved away from the debtor-in-possession model by dispossessing the management once the debtor is in resolution process. “This had two direct advantages — Indian promoters now see insolvency and debt default as a credible threat and it assures creditors that value in the debtor is protected as they look for options to effectively re-organise the debtor,” the minister added.
Citing the IBBI, Srinivas said that out of the 32-odd resolutions, 270 per cent of the liquidation value was received and so many jobs were secured. “There is no magic wand. How can you expect 100 per cent recovery?,” he said, amid concerns in certain quarters about lenders having to take haircuts during the insolvency process.
They were speaking at a conference organised by the IBBI and the Indira Gandhi Institute of Development Research here.
Insolvency and Bankruptcy Board of India (IBBI) is implementing the Code. IBBI Chairperson M S Sahoo and other senior officials were also present.