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IBC Amendment Bill 2018 passed, puts home buyers at par with creditors

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7 years ago

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IBC Amendment Bill 2018 passed, puts home buyers at par with creditors

The Lok Sabha on Wednesday, August 1, passed the Insolvency and Bankruptcy Code (Second Amendment) Bill 2018.

The Bill amends the Insolvency and Bankruptcy Code, 2016 to clarify that allottees under a real estate project should be treated as financial creditors. This aims to provide relief to home buyers who, as financial creditors, will be able to decide the future of defaulting builders alongside their lenders.

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. This makes it easier for banks to agree on salvaging a failed firm from being wound up by lowering the votes needed for taking critical decisions to 66% from 75%, reported Live Mint.

The Bill also allows the withdrawal of a resolution application submitted to the National Company Law Tribunal under the Code.  This decision can be taken with the approval of 90 per cent of the committee of creditors.

The demand from the main opposition party, the Congress, to refer the proposed amendments to a parliamentary panel was not accepted.

Interim finance minister Piyush Goyal, who moved the Bill, said the financial creditor status would help home buyers protect their hard earned savings and that the changes in voting requirements were based on global best practices.

“We looked at global best practices. In the UK, for example, a resolution plan is accepted if 51% of lenders agree. The government decided that some provisions need concessions so that more stressed assets get resolved,” the minister said.

Congress members, however, alleged that lowering the votes needed to clear corporate revival plans to 66% would benefit investors who could buy stressed assets for a song. Congress MP M Veerappa Moily demanded that the bill be referred to a parliamentary panel for review, while P Venugopal of the All India Anna Dravida Munnetra Kazhagam (AIADMK) said it did not specify whether home buyers would be treated as secured creditors.

In his reply to the discussion on the Bill, Goyal said liquidation of companies was the last option and that the intention of the law is to save enterprises wherever possible considering the need for saving jobs.

“Whether home buyers are secured or unsecured creditors will be decided on a case to case basis by the resolution professional and the courts,” said Goyal. The minister also said there was no plan to denationalize any public sector bank.

Opposition alleges move to benefit Reliance

Leader of the Congress Mallikarjun Kharge and several others alleged that the ordinance was brought to facilitate the acquisition of Alok Industries by Reliance Industries.

“People want the government to respond immediately and that is what is appreciated,” he said, adding “we want resolution and not liquidation” of ailing companies.

Kharge alleged that the ordinance was brought by the government to help the Reliance Industries to acquire Alok Industries.

“You brought this ordinance in haste. You do not respond with such alacrity during floods. The minister’s reply is not proper. We protest and walk out,” he said while leading the walkout.

Earlier, several opposition members demanded that the bill may be referred to a Standing Committee.

Participating in the debate on the measure, Congress member Veerappa Moily said the National Company Law Tribunal (NCLT) had become “an instrument for siphoning off funds” of the treasury as banks were taking huge haircuts and corporates were buying out insolvent companies for paltry sums.

“Be fair and refer the bill to the Standing Committee. Because you got stuck up in the NCLT, you brought in the bill. The Ordinance is tainted and sending it to the Standing Committee will remove the taint,” he said, adding that the “greed” behind bringing the bill is to “loot the banks”.

Moily, a former Corporate Affairs Minister, said if the bill was referred to the Standing Committee, then it would submit its report within 15 days. Moily is now the Chairman of the Standing Committee on Finance.

N K Premachandran (RSP) said the promulgation of the IBC (Amendment) Ordinance was a “clear case of crony capitalism”, saying it intended to benefit a particulate industrial house.

“Alok Industries owed Rs 300 crores to banks, Reliance Industries bought it in Rs 50 billion, banks loss was Rs 250 billion,” he asserted, while alleging that undue haste was shown by the government in bringing the bill.

Questioning the government’s urgency in bringing the IBC Ordinance when the Monsoon Session was just a month away, P Venugopal (AIADMK) said a perception was being built that the government has brought in the amendment bill to facilitate one corporate house.

“The IBC is being amended in haste to allow Reliance Industries to take over Alok Industries…. In the name of NPA clean-up, the government should not be seen as supporting crony capitalism,” Venugopal said.

Saugata Ray (TMC) said the government was leading the country to a ‘blind alley’ and the IBC should not be seen as a panacea for all illness.

“Mr Goyal, our caretaker Finance Minister, we can’t see the banking sector collapse… I support the Congress demand of referring the bill to the Standing Committee,” Ray said.

He said under the resolution process, banks were taking huge haircuts and the IBC is leading to “crony capitalism”.

Citing the resolution process of the Alok Industries, Ray said the Reliance Industries could not acquire the company at the first instance since the resolution plan got less than the required 75 per cent vote.

“The IBC amendment bill brought by the government lowers the minimum vote requirement for passing the resolution to 66 per cent from 75 per cent in the original act. Just for 66 per cent vote, you can acquire a company. Just for Reliance Industries, Government has brought an Ordinance,” Ray said.

The TMC member said in case of Bhushan Steel takeover by Tata Steel, the banks had taken 40 per cent haircut and lost Rs 210 billion. In case of Vedanta buying Electrosteel, the haircut was 60 per cent and the banks lost Rs 84 billion.

As regards Alok Industries, banks have taken 83 per cent haircut and the loss is to the tune of Rs 250 billion, he claimed in the House.

The other members who participated in the debate included Subhash Baheria (BJP), P S Chandumajra (SAD), J P Narayan (RJD) and Dushyant Chaoutala (INLD).

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India and Russia vow to walk together against terrorism, reaffirm strategic partnership

PM Modi and President Putin reaffirm India-Russia unity against terrorism, deepen energy and trade cooperation, and discuss peace efforts amid the Ukraine conflict.

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4 hours ago

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December 5, 2025

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Prime Minister Narendra Modi and Russian President Vladimir Putin on Friday underlined that India and Russia “walk together in the fight against terrorism,” reinforcing a decades-old strategic partnership that remains steady amid global geopolitical churn. The leaders issued the joint statement following talks at Hyderabad House in Delhi, where they also announced steps to boost trade, economic cooperation, and energy collaboration.

India-Russia stand firm on counter-terror cooperation

PM Modi described President Putin as a “dear friend” and highlighted Moscow’s consistent support to India on counter-terror efforts. Russia had earlier strongly condemned the terror attack in Jammu and Kashmir’s Pahalgam, allegedly linked to Pakistan-based Jaish-e-Mohammed, and reiterated solidarity with India’s fight against terrorism in all forms.

The joint remarks emphasized that the bilateral friendship, rooted in trust and mutual respect, has remained resilient for decades despite global challenges.

Focus on energy, trade and use of national currencies

A key highlight of the engagement was Russia reaffirming “uninterrupted shipments” of fuel to India. PM Modi expressed gratitude for Russia’s commitment, noting energy cooperation as a crucial pillar of the relationship. While he did not specifically mention oil purchases, given ongoing Western pressure, he emphasised cooperation in civil nuclear and clean energy.

The two countries also discussed expanding economic ties, including a possible free trade agreement. President Putin said bilateral trade was being targeted to reach USD 100 billion, and acknowledged progress toward using national currencies for payments — a remark expected to draw global attention.

Putin shares peace plan insights on Ukraine conflict

Putin briefed the Prime Minister on Russia’s perspective for a peaceful resolution to the ongoing Ukraine war and appreciated India’s continued role as a “champion of peace.” PM Modi reiterated India’s consistent position on dialogue and diplomacy.

Agreements across jobs, health, shipping and minerals

Officials exchanged multiple agreements covering employment mobility, health, shipping, chemicals and cooperation in critical minerals — further broadening the strategic footprint of the partnership.

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RBI cuts repo rate to 5.25%, paving the way for cheaper loans

The RBI has cut the repo rate to 5.25%, aiming to support growth as inflation softens. The central bank also raised GDP projections and announced liquidity-boosting measures.

Published

9 hours ago

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December 5, 2025

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Reserve Bank of India

The Reserve Bank of India (RBI) reduced the key repo rate by 25 basis points to 5.25% on Thursday, signalling relief for borrowers as banks are expected to offer lower EMIs on home and vehicle loans. Governor Sanjay Malhotra announced the move after the conclusion of the three-day Monetary Policy Committee (MPC) meeting.

RBI prioritises growth as inflation eases

Malhotra said the decision was unanimous, with the central bank choosing to focus on supporting economic momentum despite concerns over a weak rupee. The repo rate was earlier cut in June from 6% to 5.5% amid easing inflation trends.

The RBI now projects Consumer Price Index (CPI) inflation at 2% for FY2025-26, significantly softer than earlier estimates. For the first quarter of FY2026-27, inflation is expected at 3.9%, lower than the previous projection. The governor noted that rising precious metal prices may contribute to the headline CPI, but overall risks to inflation remain balanced.

GDP outlook strengthened

In a strong upward revision, the central bank increased the GDP forecast for the current financial year to 7.3%, previously estimated at 6.8%. Growth for the October–December quarter has also been revised to 6.7%.

The last quarter registered a six-quarter high expansion of 8.2%, reflecting resilient demand and steady credit flow.

“The growth-inflation balance continues to offer policy space,” Malhotra said, reiterating that the RBI’s stance remains neutral.

Other key decisions

Alongside the repo rate cut, the RBI announced adjustments to key policy corridors:

  • Standing Deposit Facility (SDF): 5%
  • Marginal Standing Facility (MSF): 5.5%

To improve liquidity and strengthen monetary transmission, the RBI will conduct forex swaps and purchase ₹1 lakh crore worth of government bonds through Open Market Operations (OMO).

RBI reviews a challenging year

Reflecting on 2025, Malhotra said the year delivered strong growth and moderate inflation even as global trade and geopolitical uncertainties persisted. He added that bank credit and retail lending remained healthy, providing support to the economy.

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IndiGo flight chaos deepens as over 500 services cancelled, passengers stranded for hours

Over 500 IndiGo flights were cancelled nationwide, leaving passengers stranded without food, clarity or their luggage as airports struggled to manage the disruption.

Published

10 hours ago

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December 5, 2025

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IndiGo flight

India’s largest airline continued to face massive operational breakdowns, triggering frustration among travellers at major airports across the country. From piles of unattended suitcases to passengers waiting over 12 hours without food or clarity, the disruption stretched into its fourth consecutive day.

Long delays, no communication leave passengers anguished

Several travellers at Delhi airport described the situation as “mental torture”, as thousands of unclaimed suitcases lay scattered across the terminal. Many slept on the floor, while others expressed anger over the lack of communication from airline staff.

One flier said he had been waiting for over 12 hours without any explanation: “Every time they say one-hour or two-hour delays. We were going to a wedding but don’t even have our luggage.”

A passenger in Hyderabad recounted a similar ordeal, saying the flight was delayed indefinitely with no food, water, or updates from the airline. At the airport, some travellers blocked an Air India flight in protest over the lack of arrangements.

Goa and Chennai airports also witnessed tense moments. Videos from Goa showed fliers shouting at IndiGo staff as police attempted to calm the situation. At Chennai, CISF denied entry to IndiGo passengers due to heavy congestion.

Major metro airports impacted; cascading cancellations nationwide

Flight cancellations and delays were reported across multiple airports:

  • Over 200 flights were cancelled in Delhi
  • More than 100 each in Mumbai and Bengaluru
  • Around 90 in Hyderabad
  • Dozens more in Pune, Vishakhapatnam, Chennai and Bhopal

Pune airport stated that parking bay congestion worsened the situation, as several IndiGo aircraft remained grounded due to lack of crew. Other airlines continued operations without disruption.

Airport authorities said they had mobilised additional manpower for crowd control and passenger support.

IndiGo admits planning lapses, says more cancellations expected

The airline acknowledged a “misjudgment” in assessing crew requirements under revised night-duty norms, which it said created planning gaps. Winter weather and airport congestion further aggravated the crisis.

IndiGo informed the aviation ministry and DGCA that some regulatory changes—such as the shift in night-duty timings and a cap on night landings—have been rolled back temporarily to stabilise operations.

The airline warned that cancellations may continue for another two to three days, and from December 8, schedules will be trimmed to prevent further disruption.

In a message to employees, CEO Pieter Elbers said restoring punctuality would not be an “easy target”.

Airline issues apology amid nationwide frustration

In a late-night statement, IndiGo apologised to customers and industry partners, acknowledging the widespread inconvenience caused by the disruptions. The airline said all teams were working with authorities to bring operations back to normal.

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