The Bill will come up before Rajya Sabha within these three days

Finance Minister, Arun Jaitley, said he would push for bankruptcy law in the remaining three days of the ongoing winter session of the Parliament.

“The next three days in Parliament are extremely crucial... I am going to be pushing for the insolvency and bankruptcy law before Parliament in the next three days,” Mr. Jaitley said while speaking at the FICCI AGM here.

Referring to the Arbitration and Conciliation Bill, which has already been passed by the Lok Sabha, he said the new legislation provides for a fast-track mechanism to complete adjudication. The Bill would come up before the Rajya Sabha in these three days.

The winter session of Parliament ends on Wednesday.

As for setting up of the commercial courts Bill, Mr. Jaitley said it sought to expedite resolution of commercial disputes pending in courts for years and decades. This too will be brought to the Rajya Sabha.

“These are important pieces of reforms which we are going to try and I hope nobody tries to hurt this country’s interest...,” he added.

With a view to promoting ease of doing business and spurring economic activities, a government-appointed panel had last month suggested a modern bankruptcy law to deal with insolvency cases within 180 days that may arise on account of business failures or economic downturns.

The draft legislation prepared by the panel also proposes early identification of financial distress so that steps could be taken to revive the ailing company.

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A panel on a new Bankruptcy Code on Wednesday recommended an overhaul of the insolvency procedures, including fixing timeframe for the entire process to be completed within a stipulated period, instead of dragging it for years. The draft bill has suggested a provision of a fresh start for individuals and unlimited liability partnership firms, while a speedier resolution process for the others.

In case of companies and limited liability firms, the Bankruptcy Law Committee, headed by former law secretary T K Vishwanath, has suggested that there should be a process for early identification of financial distress and their revival should be taken up if they are found to be viable. It has then recommended a timeline of 180 days for dealing with insolvency resolution applications, which can be 90 days "in exceptional cases". There is also a proposal for a fast track insolvency resolution process, which has to be completed within 90 days of the trigger date.

During this period, the management of the debtor would be placed with a resolution professional. The insolvency resolution plan, prepared by the resolution professional, must be approved by a majority of 75% of voting share of the financial creditors. In case of a rejection, the liquidation process will begin. In the insolvency resolution process, the creditors and the debtor will engage in negotiations to arrive at an agreeable repayment plan for composition of the debts and affairs of the debtor, supervised by a resolution professional.

In case of individuals, bankruptcy can be initiated only after the failure of the resolution process with a bankruptcy trustee responsible for administration of the estate of the bankrupt and for distribution of the proceeds on the basis of the priority.

For individuals and unlimited liability partnership firms, the draft Bill has also proposed an insolvency regime, which either results in a fresh start or insolvency resolution. The government is looking to push the Bankruptcy Code, along with a bill on National Company Law Tribunal, which has been non-operational for over a decade due to a legal challenge, during the winter session of Parliament so that it can woo investor with easier entry as well as exit rules.

The draft Bill has also proposed to establish an Insolvency Regulator for regulatory oversight over insolvency professionals, insolvency professional agencies and informational utilities. Cases relating to individuals and unlimited liability partnership firms would be dealt by the Debt Recovery Tribunal, the National Company Law Tribunal would be the adjudicating authority for companies and limited liability entities.

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