The Indian government introduced a Bankruptcy bill on Monday that will cover individuals, companies, limited liability partnerships and partnership firms, and proposes a time-bound framework. The said bill was proposed by Finance Minister Arun Jaitley.
The 'Insolvency and Bankruptcy Code, 2015' is looking to improve an out-of-date system and permit speedy exits from unsuccessful businesses. According to Indian Express, the badly required modification provides for winding-up of a failed business in 180 days and is in line with global practices, empowering lenders, operational creditors and companies to initiate insolvency proceedings. The said bill will also amend laws including the Companies Act to develop into the overarching legislation to deal with corporate collapse.
The Economic Times stated that the minister, in his February Budget speech, had branded the bill as the main priority for improving the easiness of doing business. Jaitley also said in a statement that the existing framework for insolvency and bankruptcy is insufficient, hopeless and results in unwarranted delays in declaration. He also said that the new comprehensive bankruptcy code will meet the global standards and will offer the essential necessary judicial capacity.
Currently, India is ranked 136 among 189 countries in the World Bank's ease of doing business index in the category of resolving insolvency. Livemint said India's overall raking is 130. They added that it takes, on a regular, more than four years to resolve on insolvency in India as stated by the World Bank's Ease of Doing Business report. There is no lone law dealing with insolvency and bankruptcy in India. Four different agencies, the high courts, the Company Law Board, the Board for Industrial and Financial Reconstruction (BIFR), and the Debt Recovery Tribunals (DRTs), handles the cases and often times they overlap with decisions that's why it takes years before solving case.
Companies welcomed the move. A strong bankruptcy law will definitely fasten debt recovery in the country and will progress the ease of doing business in India.
