Amendment to the Insolvency and Bankruptcy Code, 2016 through IBC Amendment Bill 2020

The recent amendment to the Insolvency and Bankruptcy Code (IBC), 2016 is considered to be one of the most sought after amendment the corporate world was looking for. One of the very key changes proposed through IBC Amendment Bill 2020 is to provide immunity to the resolution applicants who successfully bid for the company under the Corporate Insolvency Resolution Process (CIRP) from the criminal and civil liability for the wrong committed by the past promoters of the company. The only condition required is that the new resolution applicant should not be connected to the past promoters of the company. This change was very much necessitated due to the apprehension in the corporate world that the new promoters could be held liable for the past misdeeds of the old promoters and/or the assets of corporate debtor could be attached and confiscated. If this could be allowed to be done, it would go against the basic philosophy of IBC that is maximization of wealth of corporate debtor and consequently not many resolution applicants would come forward to bid for the company and hence pushing the corporate debtor into liquidation. The new amendment is a welcome move to provide immunity to the new promoters.

Author:
Dr. Amit Bhaskar, Associate Professor of Law, Unitedworld School of Law (UWSL)

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