India Inc. has changed the rules, to protect the rights of home owners who were left in the lurch when companies declare bankruptcy.
The Insolvency and Bankruptcy Board of India (IBBI) will ensure that banks and other creditors do not get away by protecting their own interests and mandate that any resolution plan for a company has to state that how it has dealt with the interest of all stakeholders.
The revised rules had been notified by the regulator for insolvency and bankruptcy proceedings last week.
Banks are part of the creditors’ committee after a company is admitted for bankruptcy.
“The change in the rules has plugged a gap as flat buyers are of the view that there is nothing to protect their interests,” a lawyer told.
The new law aims to speed up the resolution process in a period of 180 days, with a possible extension of 90 days. The law which was passed last year appoints insolvency resolution professionals who will take charge of the company’s operations and prepare a plan.
According to the report, if the creditors’ panel agrees, it will call for applications from other interested companies to take over the company after finalizing an information memorandum.
However, the National Company Law Tribunal (NCLT) will give a final call on the resolution plan based on the bids received.
“The tribunal will not clear the resolution plan without giving notice to all stakeholders and the flat buyers can raise objections at that point of time,” a lawyer was quoted as saying.
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