Business Mantra: Faridabad
C.A Sanjay Kumar : Author may be reached at email@example.com
(Fast and Easy Exit route for failed Business Houses)
After formation of Modi Government at Centre, according to some media reports, Mr. Arun Jaitley expressed the government’s intention of providing a fast and easy exit for failed businesses. He advocated that so many potential entrepreneurs do not start new ventures due to fear of getting failed as they have to face lot of humiliation, insult, jail and even some times physical assault.
In this matter, the Central Government has shown that the Government is acting fast to implement its agenda. Draft of Recommendations for New bankruptcy Legislation has been released for comments and suggestions by Bankruptcy Law Reform Committee (BLRC). BLRC has given the report in two parts.
It is proposed that new Bill on Bankruptcy will be a consolidation of existing various legislations for different type of business entities i.e. Proprietorship Firm, Partnership Firms, Companies and LLPs etc.
The basic motive of bringing new bill is to provide clarity to make the application and the process, thereafter making it more smooth and fast with provisions for different stakeholders involved. It is expected that the new bill will help in resolving the conflict between the entity under insolvency and its debtors, creditors, loan providers etc.
As per the draft, there will be a insolvency regulator, which will ensure proper and timely working of different entities in process like insolvency professionals, insolvency informational utilities, entities under insolvency etc. and these entities work with compliance of provisions of the bill and other regulations issued by the regulator from time to time.
INSOLVENCY ADJUDICATING AUTHORITY:
- D R T (Debt Recovery Tribunal) will be the adjudicating authority for unlimited liability partnership firm and proprietorship firm.
- N C L T (National Company Law Tribunal) will be the adjudicating Authority for limited liability partnerships and companies
The process would be supported by Insolvency Professional Agencies and Insolvency Information Utilities.
The new bill proposes to complete the process swiftly within 180 days of insolvency application and in exceptional cases the adjudicating authority may increase the deadline by 90 days.