Bankruptcy law reforms committee

The Finance Minister Shri Arun Jaitley, in his Budget Speech 2015-16, had identified Bankruptcy Law Reform as a key priority for improving the ease of doing business and had announced that a comprehensive Bankruptcy Code, meeting global standards and providing necessary judicial capacity, will be brought in fiscal 2015-16.The Government had constituted a Bankruptcy Law Reform Committee under the Chairmanship of Dr. T. K. Viswanathan, former Law Secretary to look into various Bankruptcy related issues and give its report along with a draft Bill on the subject to the Government.Dr. Viswanathan submitted the Report of the Committee to the Finance Minister Shri Arun Jaitley in his office here today. The Report is in two parts: Volume I – titled “Rationale and Design” and Volume II – titled “Draft Insolvency and Bankruptcy Bill”. The Report, along with a brief summary of the recommendations, has been placed on the website of the Ministry of Finance … [Read more...] about Bankruptcy Law Reforms Committee (BLRC) submits draft Bill on Insolvency

Despite recent improvements in India’s economic stability, the hangover from India’s credit fueled boom isn’t over yet. Estimates of the percentage of bank loans that are “impaired” — where repayment of the loan is classified as doubtful — run as high as 9%.  Following the global financial crisis in 2008 and 2009, India joined countries around the world in rapidly pumping money into the financial system to prevent a prolonged global recession. The strategy of cheaper and more available money, much of it flowing through India’s banks, succeeded and resulted in the country’s growth.  However, overreliance on interest-rate sensitive bank loans, slowing global GDP growth rates, and uncertain domestic economic policies exposed the vulnerabilities of India’s banks.  Bad debts and missed loan repayments started to pile up quickly.  The consequences of shortcomings in the insolvency process are … [Read more...] about Revamping India’s Bankruptcy Laws: A Way Out of India’s Bad Debt Problem

India’s Insolvency and Bankruptcy Code was held to be constitutionally valid in its “entirety” on Friday. A Supreme Court bench comprising judges Rohinton Nariman and Navin Sinha ruled that the code, which seeks to consolidate and amend the laws relating to insolvency and bankruptcy, is in consonance with the fundamental rights guaranteed under the country’s constitution. The legislation was introduced in 2016 with the intention of facilitating the resolution of corporate bankruptcy in a time-bound manner. It was challenged in a number of court petitions primarily contending that the distinction the code draws between “operational creditors” and “financial creditors” is discriminatory and loaded in favor of the latter. Section 5(7) defines a “financial creditor” as one to “to whom a financial debt is owed,” and Section 5(20) defines an “operational creditor” as one “to whom an operational debt … [Read more...] about India Supreme Court upholds validity of bankruptcy law

The Gujarat National Law University (GNLU) Centre for Corporate and Competition Law is organizing a Day Long Workshop on the Insolvency and Bankruptcy Code, 2016, on 25th March, 2017. About the WorkshopThe Workshop shall cover the framework of the Code with equal emphasis on the institutions and mechanism brought in place. The Resource Persons are the key architects behind the Code and shall help students better grasp the legal and practical implications. Furthermore, the workshop shall include sessions, which shall provide the economic rationale behind the Code and the design principles of the resolution process. Lastly, there shall be a Panel Discussion on Three Months of the New Bankruptcy Framework in India. Resource Persons Mr. T.K. Vishwanathan, Chairman, Bankruptcy Law Reforms Committee Professor Ajay Shah, National Institute of Public Finance and Policy Professor Dr. Susan Thomas, Indira Gandhi Institute of Development and Research. Mr. M. R. Umarji, Member , … [Read more...] about Workshop on Insolvency and Bankruptcy Code, 2016

The Banking Law Reform Committee set up by the Ministry of Finance, under the Chairmanship of Mr. T.K. Vishwanathan, to study the “corporate bankruptcy legal framework in India” and to submit a report to the Government for reforming the system, has suggested a number of immediate reforms for improving the corporate insolvency regime in India. Given the multiplicity of laws and adjudicatory forums governing insolvency matters in India, the BLRC opined that developing an Insolvency Code and triggering its immediate functioning is needed but since it will require more time, it presented certain interim measures in the report.The report suggests measures for determining when corporate revival and rehabilitation should be initiated by secured creditors or the debtor company. It further recommends that any secured creditor be allowed to initiate rescue proceedings if the debtor company fails to pay a single undisputed debt owed to such secured creditor exceeding a prescribed … [Read more...] about High Level Reform Committee by Finance Ministry submits its report