Sarabjit Kaur
A bill to replace an ordinance in insolvency and bankruptcy code (IBC), which was introduced in Lok Sabha on Thursday, aims to give some relief to promoters of small and medium enterprises (SMEs) by modifying the definition of one year of non-performing assets (NPAs), on the basis of which they are disqualified to bid for their companies.
The bill offers the promoters a month’s window to repay overdue loans and bid for their companies. This will be applicable where the promoters are sole bidders.
It also excludes asset reconstruction companies, alternative investment funds and banks from the definition of connected persons, protecting these entities from becoming ineligible for bidding. The bill also tweaks the language of the ordinance to bar promoters or those in the management or control of companies with over a year of NPAs from bidding. It broadens the definition of those barred from bidding, according to Business Standard.
It quoted the corporate affairs ministry saying that it [bill] proposes a 30-day grace period for promoters who had bid for companies undergoing insolvency proceedings before the ordinance was promulgated on November 23, barring them from doing so.
With the ordinance, SMEs amounting to 70 per cent were likely to be pushed into liquidation. The bill, after providing 30 more days, seeks to retain the period of insolvency to 180 days, which will be extendable by 90 days.
Apart from 12 big companies that are undergoing insolvency resolution have cumulative debt of Rs 1,50,000 crore. The 12 big cases have debt of about Rs 2,50,000 crore. The companies that are undergoing insolvency proceedings are little more over 300.
