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

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6 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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Parliament winter session: Government lists 15 bills, including Waqf bill

The session will kick off on November 25 and conclude on December 20.

Published

17 hours ago

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November 21, 2024

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The government has listed five new ones and one to amend the contentious Waqf law out of 15 bills for the winter session of Parliament. The session will kick off on November 25 and conclude on December 20.

The government has introduced five new bills, including the Coastal Shipping Bill, 2024, which aims to promote coasting trade and increase the participation of Indian-flagged vessels owned and operated by Indian citizens for both national security and commercial purposes.

Another significant legislation that will be introduced by the government is the Indian Ports Bill, 2024. This bill is designed to implement measures for the conservation of ports, enhance security, and manage pollution, ensuring compliance with India’s international obligations and statutory requirements.

Additionally, the government plans to introduce the Merchant Shipping Bill, 2024, which aims to meet India’s obligations under maritime treaties and support the development of Indian shipping while ensuring the efficient operation of the Indian mercantile marine in a way that serves national interests.

Pending legislation includes the Waqf (Amendment) Bill, which is awaiting consideration and passage after the joint committee of both Houses submits its report to the Lok Sabha. The committee is expected to report by the end of the first week of the winter session.

Currently, there are eight bills, including the Waqf (Amendment) Bill and the Mussalman Wakf (Repeal) Bill, pending in the Lok Sabha, while two additional bills are in the Rajya Sabha.

Furthermore, the government has also listed the Punjab Courts (Amendment) Bill for introduction, consideration, and passage, which seeks to increase the pecuniary appellate jurisdiction of Delhi district courts from Rs 3 lakh to Rs 20 lakh.

The Merchant Shipping Bill, along with the Coastal Shipping Bill and the Indian Ports Bill, is slated for introduction and eventual passage.

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International Criminal Court issues arrest warrant against Israel PM Benjamin Netanyahu over war crimes

The court accused Prime Minister Netanyahu and Defence Minister Gallant of crimes against humanity, including murder, persecution, inhumane acts, and the war crime of starvation as a method of warfare.

Published

17 hours ago

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November 21, 2024

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International Criminal Court issues arrest warrant against Israel PM Benjamin Netanyahu over war crimes

The International Criminal Court (ICC) today issued arrest warrants for Israeli Prime Minister Benjamin Netanyahu and former Defence Minister Yoav Gallant over alleged war crimes and crimes against humanity.

The court accused Prime Minister Netanyahu and Defence Minister Gallant of crimes against humanity, including murder, persecution, inhumane acts, and the war crime of starvation as a method of warfare. The leaders allegedly restricted essential supplies such as food, water, and medical aid to civilians in Gaza, resulting in severe humanitarian crises and deaths, including among children.

Last year in October, Israel had launched attacks on Gaza in retaliation for the surprise attack by Hamas. The Israel-Hamas war has led to the death of thousands of civilians, while lakhs have been displaced. The major infrastructures in Gaza, including hospitals and schools, were also destroyed as Israel vowed to wipe out Hamas.

The International Criminal Court stated that it found reasonable grounds to believe the accused intentionally targeted civilians and limited medical supplies, forcing unsafe medical procedures, which caused immense suffering. This ruling was based on the findings from at least October 8, 2023 until at least May 20, 2024.

The court remarked that it has assessed that there are reasonable grounds to believe that PM Netanyahu and Defence Minister Gallant bear criminal responsibility as civilian superiors for the war crime of intentionally directing attacks against the civilian population of Gaza.

Furthermore, it also noted that the lack of food, water, electricity and fuel, and medical supplies created conditions of life calculated to bring about the destruction of part of the civilian population in Gaza, leading to death of civilians, including children due to malnutrition and dehydration.

Additionally, the International Criminal Court dismissed two challenges by Israel against its jurisdiction in the situation in the State of Palestine.

Notably, Israel had contested the ICC’s jurisdiction, claiming it could not be exercised without Israel’s consent. Nonetheless, the Chamber ruled that the Court has jurisdiction based on Palestine’s territorial scope, including Gaza, the West Bank, and East Jerusalem. It further noted that Israel’s objections were premature, as jurisdictional challenges under the Rome Statute can only be made after an arrest warrant is issued.

Reportedly, Israel had also requested a fresh notification regarding the investigation, started in 2021. Denying the request, the court stated that Israel had earlier declined to request a deferral, making additional notifications unnecessary.

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Yogi Adityanath accords tax-free status to Sabarmati Report film in Uttar Pradesh

Earlier, Prime Minister Narendra Modi and Home Minister Amit Shah have also praised this film.

Published

18 hours ago

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November 21, 2024

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Uttar Pradesh Chief Minister Yogi Adityanath on Thursday accorded a tax-free status to ‘The Sabarmati Report’ film, based on the train burning incident at Godhra in Gujarat in 2002, in the state.

The announcement was made after Chief Minister Adityanath attended the screening of Vikrant Massey and Raashii Khanna-starrer ‘The Sabarmati Report’ in Lucknow with the film’s cast.  

Speaking to reporters, actor Vikrant Massey thanked the Uttar Pradesh Chief Minister for making ‘The Sabarmati Report’ film tax-free in the state. “I want to thank Yogi Adityanath ji. This is an important film and I appeal to everyone to go and watch this film,” he said.

Chief Minister Adityanath along with many of his cabinet colleagues watched the film ‘The Sabarmati Report’ under a special screening at a cinema hall in the capital, said a spokesperson of the state government.

Several people associated with the film unit were also present on the occasion. Later the chief minister announced to make this film tax-free in UP.

The BJP-ruled states have been praising the makers of The Sabarmati Report, claiming the team has tried to bring out this truth in front of the people of the country through the film.

The saffron party is appealing to people to watch this film and try to get closer to the truth of Godhra.

Uttar Pradesh becomes the sixth BJP-ruled state after Haryana, Rajasthan, Chhattisgarh, Madhya Pradesh and Gujarat to declare lead actors Vikrant Massey and Raashii Khanna’s film tax-free.

Adityanath said along with identifying the faces of those who are conspiring against the country for political gains, there is also a need to expose them. The film team has discharged its responsibilities to expose the truth, he said, adding an attempt has been made to bring the real truth in front of the country in a big way through the film.

The Sabarmati Report is said to be based on the incident of setting fire to a train full of ‘karsevaks’ in Godhra on February 27, 2002, killing 90 devotees. After this incident, communal riots broke out in Gujarat. Earlier, Prime Minister Narendra Modi and Home Minister Amit Shah have also praised this film.

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