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

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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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MK Stalin predicts frequent PM Modi visits to Tamil Nadu before assembly election

MK Stalin has said Prime Minister Narendra Modi will visit Tamil Nadu more often ahead of the Assembly election, calling the tours politically motivated and questioning the Centre’s support to the state.

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MK Stalin

Tamil Nadu Chief Minister M. K. Stalin has predicted that Prime Minister Narendra Modi will increase his visits to the state as the Assembly election, expected in April or May, draws closer.

Speaking ahead of the polls, the DMK president said the Prime Minister has already begun touring Tamil Nadu and is likely to visit frequently in the coming months. He claimed that such visits could create discomfort within the BJP-led National Democratic Alliance (NDA), as alliance partners may fear the political impact of repeated appearances.

Stalin calls visit politically motivated

The Chief Minister described the Prime Minister’s scheduled programmes in the state as “politically motivated”. PM Modi is set to attend various events in Madurai in southern Tamil Nadu, including the inauguration of the first phase of the AIIMS hospital project. He is also expected to visit the Thiruparankundram Temple amid the Karthigai Deepam-related controversy and participate in a public meeting organised by the NDA.

Stalin said he has been working for all sections of the population, including those who did not vote for his party. In contrast, he remarked that some leaders are visible in the state only during election time and increase their visits as polls approach.

Criticism over Union Budget allocations

The DMK leader also criticised the BJP-led central government, accusing it of neglecting Tamil Nadu. He pointed out that while approval was recently granted for the Gujarat Metro project, there were no major announcements or allocations for Tamil Nadu in the Union Budget.

Stalin asserted that voters would remember the lack of significant measures for the state. He framed the upcoming election as a contest between Tamil Nadu and the NDA, stating that the state should be governed from Fort St George in Chennai rather than from Delhi.

The ruling DMK is currently allied with several smaller parties and, at present, the Congress, as it seeks a third consecutive term in office. Its principal rival, the AIADMK, is aligned with the BJP as part of the NDA.

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Shashi Tharoor questions Centre over Kerala name change to Keralam

Shashi Tharoor has criticised the Centre’s decision to approve renaming Kerala as Keralam, questioning its impact and pointing to the lack of major projects for the state.

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shashi tharoor

Congress MP Shashi Tharoor has criticised the central government over its decision to approve the renaming of Kerala as ‘Keralam’, arguing that the move prioritises symbolism over development.

Reacting to the Union Cabinet’s approval, Tharoor said that the state’s name has always been ‘Keralam’ in Malayalam and questioned the practical impact of introducing the Malayalam term into English usage.

“It has already been ‘Keralam’ in Malayalam. So now, a Malayalam word is coming into English. I don’t know what difference it makes,” he said, adding that the state has not received major projects such as an AIIMS or new institutions from the Centre. He also pointed out that no significant allocations were made for Kerala in the Union Budget.

In a separate post on X, Tharoor raised what he described as a “small linguistic question” about what residents of the state would be called if the name change is implemented. Referring to existing terms such as “Keralite” and “Keralan”, he remarked that alternatives like “Keralamite” sounded like a microbe and “Keralamian” like a rare earth mineral.

The Union Cabinet, chaired by Prime Minister Narendra Modi, cleared the proposal on Tuesday. The move comes ahead of the upcoming state Assembly elections, in which 140 members of the legislative assembly are to be elected. The poll schedule is yet to be announced by the Election Commission of India.

The state assembly had earlier passed a resolution seeking the change in official records. Chief Minister Pinarayi Vijayan had moved the resolution in 2024, urging the Union government to adopt the name ‘Keralam’ in all languages listed in the Eighth Schedule of the Constitution.

He had stated that the demand for a united Kerala for Malayalam-speaking people dates back to the national freedom movement.

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Tamil Nadu potboiler: Now, Sasikala to launch new party ahead of election

Sasikala has announced the launch of a new political party ahead of the Tamil Nadu Assembly elections, positioning herself against AIADMK chief Edappadi K Palaniswami.

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In a significant political development ahead of the Tamil Nadu Assembly elections, expelled AIADMK leader V. K. Sasikala has announced that she will float a new political party and contest the polls by fielding her own candidates.

Speaking in Madurai before heading to Pasumpon for a public event, Sasikala said she would unveil her party’s flag later in the evening. She indicated that more details regarding the party’s structure and plans would be shared at the gathering.

The event venue carries political symbolism. Pasumpon is the birthplace of Thevar leader Muthuramalinga Thevar, and Sasikala herself belongs to the influential Thevar community in southern Tamil Nadu. The programme was held as part of birth anniversary events of former Chief Minister J. Jayalalithaa.

Direct challenge to EPS

Sasikala’s move is being viewed as a direct political challenge to AIADMK general secretary Edappadi K. Palaniswami (EPS). After Jayalalithaa’s death in 2016, Sasikala briefly took control of the party and had appointed Palaniswami as Chief Minister. However, following her conviction in the disproportionate assets case, she served a four-year prison term, and during that period, she was expelled from the party.

Palaniswami later aligned with O. Panneerselvam, whom Sasikala had earlier removed from the Chief Minister’s post. The two leaders subsequently adopted a dual leadership arrangement within the party and government.

Sasikala remains disqualified from contesting elections until 2027 due to her conviction. Nevertheless, she has stated that she intends to field candidates under her new party banner.

Fragmented Thevar vote base

Over the years, expulsions within the AIADMK — including Sasikala, her nephew TTV Dhinakaran and O Panneerselvam — have led to divisions within the Thevar support base. Political observers have linked this fragmentation to the party’s weakened electoral performance in the elections following Jayalalithaa’s passing.

While Dhinakaran has returned to the NDA fold, reports suggest Palaniswami is opposed to any arrangement that includes Sasikala or Panneerselvam. OPS, meanwhile, has exited the NDA.

Sasikala has repeatedly criticised Palaniswami, describing him as a betrayer, while he maintains that his leadership stems from the support of AIADMK legislators rather than her backing.

The AIADMK has not issued an official statement on Sasikala’s announcement. However, a senior party leader questioned her political standing, pointing out her disqualification from contesting elections and referring to legal issues linked to Jayalalithaa’s death.

With the Assembly polls approaching, Sasikala’s re-entry into active politics could further complicate the opposition space in Tamil Nadu and influence electoral calculations, particularly in the southern districts.

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