New amendments to IBC can maximise recovery of stressed assets
Recently the Insolvency and Bankruptcy Code (IBC) has been amended to maximize and speed up recovery.
Amendments made to IBC:
- Lenders have been allowed to sell assets separately in cases where no resolution plan has been received as a whole.
- Performance-based payment structure for resolution professional (RPs) has been announced.
- RPs are professionals involved in insolvency proceedings. They are appointed to conduct the resolution process.
- RPs receives a success fee once a company’s insolvency process is successfully resolved. The rate of this fee is not predetermined.
IBC was implemented in the year 2016. It has the following objectives:
- Dealing with the problems of bad loans, and acting as a one stop solution for resolving insolvency and bankruptcy issues.
- This law consolidates and amends several laws relating to reorganization and insolvency resolution of corporate persons, partnership companies and individual affairs.
Importance of IBC:
- Reduces the time and cost of resolution of insolvency
- Promotes ease of doing business,
- It promotes change in the behavior of borrowers for speedy resolution etc.
Source – The Hindu
