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[MUMBAI] India's Insolvency and Bankruptcy Board on Thursday called for public comment on the country's revised bankruptcy code that went into effect last year, signaling that it plans to tweak the law, which the government hopes will resolve India's US$150 billion stressed-loans problem.
The board said the window for receiving comments will be open till Dec 31. Modifications to the regulations would be made by March 31 and take effect from April 1, 2018.
Lawyers and insolvency professionals maintain that the new Insolvency and Bankruptcy Code is a huge step forward from the prior regime. That involved a series of overlapping regulations under which lenders, company promoters and other creditors could initiate competing proceedings in different forums and regions.
All the same, some lawyers contend issues exist with the new code that need to be resolved. Among those is an opportunity for borrowers to get a fair hearing before any matters are admitted to tribunals empowered to rule on these cases. "This is a lacuna in the new code and it will need to get addressed," said a lawyer involved in some ongoing insolvency cases under the new code.
The Insolvency and Bankruptcy Board's move comes just as the new act is set to be tested in some major cases.
The Indian government recently empowered its central bank to push banks to begin insolvency proceedings on non-performing assets under the bankruptcy code. And the Reserve Bank of India last month directed lenders to begin proceedings against 12 of the country's largest defaulters .