IBC ordinance :Promoters out of the way

The Government recently Amended the Insolvency and bankruptcy code via ordinance and the president has given his nod. The Act was amended to ensure that promoters are barred from participating in the resolution process.

Genuine promoters face the heat

The ordinance has been welcomed by many people but some people have objected the amendments and said that genuine honest promoters would also be affected.They argue that banks would find it difficult to recover their loans if they don't find alternatives and they may be forced to take haircuts when the resolution process is unsuccessful and sometimes promoters may present best resolution process as they had experience of what had gone wrong.

However many others claim that all promoters must be liable to law and they must be ensured that they don't return to power because they have failed in running a business and they cannot guarantee that the company would not become bankrupt once again.

Wilful defaulters

The ordinance bars Wilful defaulters from participating in resolution process so that people have a faith that criminals would be booked and would not be left free. Currently, the authorities find it difficult to recover the dues because of the loopholes in the system and the ordinance plugs them.

Trust in banks

The ordinance brings a trust in bankers and other creditors that cases would not be filed on them if they go through a specified process.Earlier the defaulters have cheated the system and the bankers fear that they may face jail even though they made genuine decisions
.
Although the ordinance may not assure all bankers due recoveries but the trust helps them to take decisions with good intent and public money is dealt carefully.

Speedy resolutions

Currently, promoters take a long time to submit proposals to make sure that the market recovers and they can escape but the ordinance has
prohibited such acts and it would ensure that all Insolvency professionals stick to their timelines so that resolution takes place smoothly.

Finally, the Ordinance may ensure that criminals don't enter the system once again but some steps are needed so that new criminals don't emerge and the banks remain healthy.