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New amendments to IBC can maximise recovery of stressed assets

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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

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