Bill to amend law for recognising homebuyers as financial creditors tabled in Lok Sabha

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Finance minister Piyush Goyal on Monday introduced a Bill to amend the insolvency law that would recognise homebuyers as financial creditors and allow genuine promoters of micro, small and medium enterprises to bid for their stressed firms. The Insolvency and Bankruptcy Code (Amendment) Ordinance, 2018, allows withdrawal of a case after admission by the adjudicating authority, but not without the approval of 90% of creditors. The Bill is meant to replace the ordinance promulgated in June after it received the Presidential nod after being cleared by both the Houses of Parliament. To encourage resolution rather than liquidation, the voting threshold for approving a resolution plan has been trimmed to 66% from 75%. For routine decisions, the voting threshold is fixed at 51%. Some of the Opposition parties, however, alleged the changes to the IBC were intended to Rejecting such an allegation, Goyal said when the IBC was first introduced in Parliament, many members thought that further So, a committee (under corporate affairs secretary Injeti Srinivas) was set up to suggest amendments. The amendment Bill has been brought in Parliament, based on the recommendations of the panel, the finance minister said. According to the Bill, pure play financial entities like banks would be exempted from the disqualification provision on account of holding stake in or acquiring stressed firms earlier. In other words, such NPA shall not disqualify the resolution application during.the three-year grace period, The ordinance provides for a mechanism to allow participation of security holders, depositholders and all other classes of financial creditors beyond a certain number to attend the CoC meetings through authorised representations. This places the primary onus on the resolution applicant to certify its eligibility,