The insolvency regulator has notified new rules that will give promoters and other stakeholder 90 days after the commencement of insolvency proceedings to re-take control of the company through agreements with creditors, as per ET reports.
The new rules also specify a limit of one year for the liquidation of such a company from the date of commencement of insolvency proceeding.
As many as 378 companies with total creditor claims of Rs 2,57,642 crore have been sent into liquidation under the Insolvency and Bankruptcy Code till March 31, 2019.
“Where a compromise or arrangement is proposed under Section 230 of the Companies Act … it shall be completed within ninety days of the order of liquidation under subsections,”
an Insolvency and Bankruptcy Board of India (IBBI) notification said.
Section 230 of the Companies Act allows for promoters or any class of creditors of a company to reach a compromise or arrangement with other stakeholders of the company to take control of the company.
Experts said this should provide a reasonable opportunity to stakeholders to reach a compromise or arrangement with stakeholder.
The notification also mandates that a company must be liquidated within one year of commencement of liquidation proceedings.
However experts have pointed out that achieving this goal may be unrealistic in cases where there are legal disputes surrounding assets especially like land and buildings.
By: Abhinav Ranjan, Editorial Desk, DKODING Media