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10 Things To Know About Latest Amendments To Insolvency And Bankruptcy Code (IBC)
12 Dec 2019, 02:20 PM IST 
The Insolvency and Bankruptcy Code (IBC), 2016, has already been amended thrice till date
- The latest changes to the IBC ring-fence the successful bidders of stressed assets from the risk of criminal proceedings against offences committed by previous management and promoters, according to an official statement.
- In other words, successful bidders will be provided more immunity against any risk of criminal proceedings for offences committed by previous promoters of companies concerned.
- The bill also proposes a threshold for financial creditors to prevent frivolous triggering of corporate insolvency. In other words, this will ensure that bankruptcy is not invoked for small amounts.
- The amendments are aimed at providing more protection to bidders participating in the recovery proceedings and in turn boosting investor confidence in the country's financial system.
- The provisions allow the corporate debtors to continue as a going concern by clarifying that the licenses, permits, concessions and clearances cannot be terminated or suspended during the moratorium period.
- "Approval by the cabinet to provide immunity to successful bidders under IBC is a great boost to IBC," said Sapan Gupta, partner and national head of banking and finance at law firm Shardul Amarchand Mangaldas."This is a positive and timely step and will increase confidence among prospective buyers of stressed assets."
- The government has in the past few months announced a series of steps to restore the health of the country's financial sector to achieve its goal of making India a $5-trillion economy. The country's economy expanded 5 per cent in the quarter ended September 30, marking the lowest pace of growth in more than six years.
- In a separate development, the cabinet approved Partial Credit Guarantee Scheme for purchase of high-rated pooled assets from financially sound non-banking financial companies (NBFCs) - also known as shadow banks - by state-run banks.
- Easier lending rules are aimed at enabling NBFCs to get better access to funds. NBFCs have been key drivers of lending growth in India, with their consolidated balance sheet worth Rs 28.8 lakh crore ($400 billion) in 2018-19, according to RBI data.
- The Insolvency and Bankruptcy Code replaces laws such as the Sick Industrial Companies Act (SICA Act) and the Securitisation and Reconstruction of Financial Assets and Enforcement of Securities Interest Act (SARFAESI Act), shifting the control of recovery process to creditors from borrowers.
