Kolkata, Jan 12: Insolvency and Bankruptcy Board of India today said the new code is not meant to address any fraud on the part of company promoters but allows creditors and other stakeholders to go for health check of the corporate at the first available opportunity. “The code is not going to address fraud and inter corporate management. This provides all the stakeholders to trigger the process at the first available opportunity,” Insolvency and Bankruptcy Board of India chairman MS Sahoo said here today when asked whether the code can check frauds by promoters.
Speaking on the sidelines of a CII organised seminar on the newly enacted code, Sahoo said any creditor or even employee can trigger the process if debt repayment default is Rs 1 lakh or above. The board feels that regulations for the code has been in place from December and some more time was needed to get the feedback on its success. The code aims at time-bound resolution for insolvency and exit as part of ease of doing business. Sahoo said that the board is also working on a framework for direct liquidation bypassing insolvency resolution. “We will come out with framework for voluntary liquidation approach, that is direct liquidation by February-end or March.”
A company has to apply to National Company Law Tribunal to begin the process on the code. The board has selected 974 insolvency professionals on a a temporary basis for six months and began a certification test for inducting a regular professional. Based on recommendation by the Parliamentary joint committee on Insolvency and Bankruptcy code, the board has decided not to recommend any insolvency professionals which will instead be decided by creditors’ committee initiating insolvency action.