Once promulgated, the bankruptcy law will also considerably improve the ease of doing business in India—a key focus of the NDA govt
A draft law that will allow for the faster closure of troubled businesses and give investors an easy exit is likely to be ready by mid-October, bringing India closer to putting in place a bankruptcy law.
Once promulgated, the bankruptcy law will also considerably improve the ease of doing business in India—a key focus of the National Democratic Alliance (NDA) government.
An information database storing all information about a company and its debtors to help in early detection of deteriorating financial health and creation of a new class of insolvency professionals to assist in the turnaround of a sick company will be among the key features of the proposed law.
A committee headed by former law secretary T.K. Viswanathan was set up last year and tasked with formulating a bankruptcy code. It submitted an interim report earlier this year.
“We have agreed on the broad framework and the drafting process is on. We should be able to give the draft legislation to the finance minister by middle of October,” said Viswanathan.
The bankruptcy code is aimed at creating an overarching framework to make it easier for sick companies to either wind up their business or engineer a turnaround, and for investors to exit. It will also propose a framework for addressing insolvency issues faced by individuals and partnership firms.
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