New Delhi: In a significant move aimed at relaxing criteria for management control of companies facing liquidation proceedings in the National Company Law Tribunal (NCLT), the government is likely to bring in an ordinance to further amend the Insolvency and Bankruptcy Code (Amendment) Act 2017.
The Union Cabinet may take up the proposed ordinance during its meeting scheduled for April 25.
There a likelihood that the ordinance could also have some provisions related to concerns of lakhs of homebuyers who have been victims of unfinished projects with realtors claiming bankruptcy, sources said.
According to highly placed sources, the ordinance is likely to provide flexibility to the board member of a corporate entity which is facing NCLT proceedings, to bid for it even though the member may be a majority shareholder or owner of another entity.
As of now an owner of a company who is on the board of the management of an entity which is facing insolvency proceedings, is not allowed to bid for that entity.
The proposed ordinance is likely to provide that freedom to the board member, sources in the know said.
The Insolvency and Bankruptcy Code (Amendment) Act 2017 came into existence when the bill seeking amendments in the Insolvency and Bankruptcy Code was passed by Parliament in January this year.
It prohibits certain persons from submitting a resolution plan in case of defaults. These include wilful defaulters, promoters or management of the company if it has an outstanding non-performing debt for over a year, and disqualified directors, among others. Further the amended code bars the sale of property of a defaulter to such
persons during liquidation.
Now the proposed ordinance which is likely to come before Cabinet on Wednesday is seeking further amendment in the Act, to provide greater leeway to board members in a company facing liquidation, to bid for it.
