Union Cabinet to amend bankruptcy law

The Union Cabinet in order to amend the bankruptcy law has approved an ordinance. This step is being taken to protect the interests of homebuyers and enabling smooth resolution of stressed companies. Experts believe that if these changes are implemented, homebuyers will be on par with banks and financial creditors during insolvency proceedings and will be able to protect their rights to get back funds if liquidation of a company takes place. Minister for Law and Justice Ravi Shankar Prasad reported that the cabinet has cleared Ordinance to the Insolvency and Bankruptcy Code and said, “I cannot disclose anything because it’s a new legislation except to reinforce that the Cabinet has approved it”. The Insolvency Law Committee has suggested the Ministry of Corporate Affairs to treat the home buyers as financial creditors so that they can participate in an insolvency resolution process. However, defaulting promoters will be completely banned from bidding for companies undergoing resolution.