"QUESTION OF THE DAY FOR CRACKING IAS 2018"
WHAT IS THE SIGNIFICANCE OF INSOLVENCY AND BANKRUPTCY CODE? EXPLAIN THE RECENT AMENDMENTS TO IBC AND ALSO EXPLAIN THE CONCERNS RELATING TO AMENDMENT THAT GIVES THE STATUS OF FINANCIAL CREDITORS TO HOME BUYERS.
• Insolvency and bankruptcy code 2016, was introduced to resolve the bankruptcy crisis in corporate sector.
* Significance of IBC:
• According to IBC a financial creditor holds an important role in the corporate insolvency process
• The committee of creditors (COC) includes all Financial creditors of a corporate sector.
• The COC has the power to either approve or reject the resolution plan and to revive the resolution plan to revive the debtor or can proceed to liquidate the debtor.
• The entire process is time bound and must be completed within a period of 180 days. It can be extended up to 90 days.
* Amendments to IBC :
• Promotors and guarantors of an MSME will be qualified for bidding, if they are not wilful defaulters.
• It Amended companies Act, to enable companies to transfer cases pending before any court to National company law tribunal.
• Home buyers are made as equilent with financial creditors. Previously, they were under secured creditors.
• person submitting a resolution plan for a sick firm need to give an affidavit.
* Concerns:
• Financial creditors largely consist of banks and financial institutions, which home requisite expertise to actively participate in resolution process.
• In reality, home buyers will have little interest in the company's revival or relating to macro economic implications.
• Their end goal will be to recover their money.
• Hence, inclusion of home buyers in the category of financial creditors will only cause unnecessary delay in the corporate liquidation process.
• Promotors and guarantors of an MSME will be qualified for bidding, if they are not wilful defaulters.
• It Amended companies Act, to enable companies to transfer cases pending before any court to National company law tribunal.
• Home buyers are made as equilent with financial creditors. Previously, they were under secured creditors.
• person submitting a resolution plan for a sick firm need to give an affidavit.
* Concerns:
• Financial creditors largely consist of banks and financial institutions, which home requisite expertise to actively participate in resolution process.
• In reality, home buyers will have little interest in the company's revival or relating to macro economic implications.
• Their end goal will be to recover their money.
• Hence, inclusion of home buyers in the category of financial creditors will only cause unnecessary delay in the corporate liquidation process.
* I'll continue tomorrow.....
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