The government is planning to amend the Insolvency and Bankruptcy Code (IBC) to streamline the resolution process.
The government may amend the insolvency law to stipulate that a resolution plan will require the Competition Commission of India's (CCI's) approval only after it is endorsed by the committee of creditors (CoC) and not before that, a senior official indicated.
Currently, as per Section 31 (4) of the Insolvency and Bankruptcy Code (IBC), the antitrust regulator's clearance is required before resolution plans are approved by the CoC that comprises financial creditors alone.
This rule, however, applies when the resolution plan contains a merger or acquisition above a certain threshold, thereby raising competition issues.
The latest proposal by the corporate affairs ministry comes after the Supreme Court in January rejected the winning bid of AGI Greenpac for Hindustan National Glass and Industries, citing its failure to get the competition regulator's clearance before the CoC approval.
To be sure, the apex court, earlier this month, admitted a plea by the CCI to review this decision.
Hindustan National Glass is the country's largest glass packaging firm with a 60% market share, while AGI Greenpac is the second-biggest player.
With the latest proposal, the ministry aims to ease the burden of the CCI while ensuring enough scrutiny of the winning bid.
The ministry may introduce a raft of amendments to the Insolvency and Bankruptcy Code in the next Parliament session, the official said. The amendments could also include a creditor-led framework that would reduce the resolution timelines.
Source: ET Legal World
