Government Eyes IBC Amendment Amid Supreme Court Critique

In a crucial development, the Parliamentary Standing Committee on Finance, led by BJP MP Bhartruhari Mahtab, is set to convene and scrutinize oral evidence from representatives of State Bank of India, Bank of Baroda, Indian Bank, and Indian Overseas Bank regarding the 'Review of working of Insolvency and Bankruptcy Code and Emerging Issues'. RBI Governor Sanjay Malhotra will provide insights on 'RBI's Evolving Role in India's Dynamic Economy'.

Sources reveal that the central government plans to introduce an amendment to the Insolvency and Bankruptcy Code (IBC) during the upcoming monsoon session of Parliament, targeting Section 31(4). This section currently mandates the Competition Commission of India's (CCI) prior approval for any resolution plan. The proposed change aims to ease the burden on the CCI by eliminating the need for its nod in certain IBC resolutions.

The urgency for this amendment is underscored by the Supreme Court's recent observations regarding AGI Greenpac's acquisition plan for Hindustan National Glass, deemed unsustainable without CCI clearance. The court's ruling highlighted the necessity of legislative clarification, as AGI Greenpac's resolution was quashed due to the absence of CCI approval, invalidating creditor endorsements achieved in October 2022.

(With inputs from agencies.)