The Insolvency and Bankruptcy Board of India (IBBI) on April 04, 2021 has issued the Insolvency and Bankruptcy Code (Amendment) Ordinance, 2021 to further amend the Insolvency and Bankruptcy Code, 2016.
The following amendments have been made:
• Section 11A, which specifies the disposal of applications under section 54C and under Section 7 or Section 9 or Section 10, has been inserted, namely:
“Where an application filed under section 54C is pending, the Adjudicating Authority shall pass an order to admit or reject such application, before considering any application filed under section 7 or section 9 or section 10 during the pendency of such application under section 54C, in respect of the same corporate debtor.
Where an application under section 54C is filed within fourteen days of filing of any application under section 7 or section 9 or section 10, which is pending, in respect of the same corporate debtor, then, notwithstanding anything contained in sections 7, 9 and 10, the Adjudicating Authority shall first dispose of the application under section 54C.
Where an application under section 54C is filed after fourteen days of the filing of any application under section 7 or section 9 or section 10, in respect of the same corporate debtor, the Adjudicating Authority shall first dispose of the application under sections 7, 9 or 10.
The provisions of this section shall not apply where an application under section 7 or section 9 or section 10 is filed and pending as on the date of the commencement of the Insolvency and Bankruptcy Code (Amendment) Ordinance, 2021.”
• Chapter III-A, which specifies the pre-packaged insolvency resolution process, has been inserted.
• Section 54A, which specifies the corporate debtors eligible for pre-packaged insolvency resolution process, has been inserted, namely:
“An application for initiating pre-packaged insolvency resolution process may be made in respect of a corporate debtor classified as a micro, small or medium enterprise under sub-section (1) of section 7 of the Micro, Small and Medium Enterprises Development Act, 2006.”
• Section 61 (4), which specifies the appeal against a liquidation order, has been substituted, namely:
“An appeal against a liquidation order passed under section 33, or sub-section (4) of section 54L, or sub-section (4) of section 54N, may be filed on grounds of material irregularity or fraud committed in relation to such a liquidation order.
An appeal against an order for initiation of corporate insolvency resolution process passed under sub-section (2) of section 54-O may be filed on grounds of material irregularity or fraud committed in relation to such an order.”
• Section 67A, which specifies the fraudulent management of corporate debtor during pre-packaged insolvency resolution process, has been inserted, namely:
“On and after the pre-packaged insolvency commencement date, where an officer of the corporate debtor manages its affairs with the intent to defraud creditors of the corporate debtor or for any fraudulent purpose, the Adjudicating Authority may, on an application by the resolution professional, pass an order imposing upon any such officer, a penalty which shall not be less than one lakh rupees, but may extend to one crore rupees.”
[Ordinance No. 03 of 2021]
