The Insolvency and Bankruptcy Code (IBC) Amendment Bill is set to be tabled in the upcoming Monsoon session. The amendment aims to facilitate group insolvency resolution by enabling lenders to take subsidiary companies to NCLT as a combined entity, said sources. This move will aid in streamlining insolvency processes, eliminating redundancy and promoting efficiency.
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The proposed amendment will address a common issue where lenders have to file separate insolvency cases against subsidiaries and parent companies. This creates unnecessary wastage of resources and time. By allowing group insolvency, lenders can approach NCLT as a combined entity, thereby simplifying the process and saving time.
Group insolvency will increase recoveries for lenders from ailing group companies and its subsidiaries. Experts suggest prioritizing group insolvency over cross-border insolvency. Cross-border insolvency allows access to foreign jurisdictions to insolvency representatives. While the corporate affairs ministry had received public comments on the proposed cross-border insolvency framework under the IBC, the amendment enabling group insolvency resolution will be given priority, said sources.
The move will improve the efficiency of insolvency processes and increase the chances of successful resolution. The proposed amendment will provide more options for lenders to initiate insolvency proceedings, thereby protecting the interests of creditors and other stakeholders.
