Rajya Sabha passes Bankruptcy Code bill 

Rajya Sabha passes Bankruptcy Code bill 

Context

The Rajya Sabha on Tuesday passed the Insolvency and Bankruptcy Code (Amendment) Bill, 2017, which bars unscrupulous persons from misusing the provisions of the Code. The Bill, which replaces an ordinance promulgated last November, was cleared by the Lok Sabha last week

The Bill, which replaces an ordinance promulgated last November, was cleared by the Lok Sabha last week.

Concurring with Congress leader Jairam Ramesh, Finance Minister Arun Jaitley said it was only in recent years that the government had chartered into the bankruptcy and insolvency area. “Therefore, for all of us, it is a learning experience. We encounter situations that we had not anticipated earlier, and as we move further, we will certainly require evolution as far as our laws and procedures are concerned,”

Code’s application for MSME

Insolvency Legal Committee was examining if separate regulations were required for the sector.

Haircut

Another major concern was the huge “haircut [loss on account of auction of assets of defaulting companies],” to the extent of 75%, being taken by public sector creditors

Government: it was for the creditors to decide how much haircut they wanted to settle for.