IBC tweak to benefit one co: BJD

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New Delhi: Objecting to some provisions of the Insolvency and Bankruptcy Code (IBC) (second amendment) Bill 2018, Biju Janata Dal (BJD) MP Bhartruhari Mahtab Tuesday alleged that the Union government had brought the amendment to benefit one company.
Speaking in the Loka Sabha, the MP said the government had brought the ordinance in June to benefit one specific company. Clause 25 of the Bill seeks to amend section 33 of the Code to provide a reduced threshold from 75 per cent to 66 per cent of voting share for obtaining the approval of the Committee of Creditors (CoC) for making an application to the adjudicating authority to pass a liquidation order.
“I would like to understand from the minister whether the secretary level committee suggested amendment of section 33 which you have incorporated in clause 25 of the Bill. If it was their recommendation then one can say there is nothing to do with that one company but if not then you have to explain what prompted you to bring this ordinance in June,” Mahtab said.
“The House was supposed to convene in month of July. Why you could not wait for another 30-40 days. You could have brought the Bill during this session. And during this period what has happened. What specific steps have been taken through this ordinance that has helped National Company Law Tribunal (NCLT), that has helped to do away with bad debt,” asked Mahtab.
Citing the resolution process of textile firm Alok Industries, Mahtab said two major companies had jointly submitted before the CoC to acquire the company. However, the CoC of Alok Industries could not approve the resolution plan as it got over 70 per cent vote, as against the required 75 per cent. This ordinance was brought to benefit the company.
Notably, the Bill introduced by the Finance Minister Piyush Goyal amends the Insolvency and Bankruptcy Code, 2016 to clarify that allottees under a real estate project should be treated as financial creditors. The voting threshold for routine decisions taken by the committee of creditors has been reduced from 75 per cent to 51 per cent. For certain key decisions, this threshold has been reduced to 66 per cent.
The Bill also allows the withdrawal of a resolution application submitted to the NCLT under the Code. This decision can be taken with the approval of 90 per cent of the committee of creditors.