New amendments to IBC can maximise recovery of stressed assets

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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