Insolvency Bill sets 330-day deadline for corporate resolution

This Bill amends the Insolvency and Bankruptcy Code, 2016 to set a strict 330-day deadline for completing corporate insolvency resolution processes and to ensure that operational creditors and dissenting financial creditors receive payments no less than they would in liquidation.

Corporate debtors, financial creditors, operational creditors, the Committee of Creditors, the Adjudicating Authority, and the Insolvency and Bankruptcy Board of India (IBBI).

• Clarifies that a resolution plan may include corporate restructuring via merger, amalgamation, or demerger.
• Requires the Adjudicating Authority to record reasons in writing if it does not ascertain default within the specified time.
• Mandates that the corporate insolvency resolution process must be completed within 330 days from the commencement date, including time taken in legal proceedings.
• Provides that if the process is not completed within 330 days, it must be completed within 90 days of the Act's commencement.
• Allows the authorised representative of financial creditors to vote based on the decision of more than 50% of the voting share of the financial creditors they represent.
• Requires that operational creditors receive payment not less than the liquidation value or the amount they would receive under the priority order in section 53, whichever is higher.
• Requires that financial creditors who do not vote in favour of the resolution plan receive payment not less than the liquidation value of their debt.
• Clarifies that an approved resolution plan is binding on the Central Government, State Governments, and local authorities regarding statutory dues.
• Clarifies that the Committee of Creditors may decide to liquidate the corporate debtor at any time after its constitution until the confirmation of the resolution plan.

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