Rajya Sabha passes Bankruptcy Code
- Law allows early identification of financial distress to help revive a company
- 75% of creditors have to agree on a revival plan
- Individuals to be given a chance of ‘Fresh Start’, where outstanding debt will be written off
- Allows for insolvency regulator; says regulatory powers with govt till such body is set up
- Specifies penalties for offences committed under corporate insolvency
- Penalty will be imprisonment up to five years, or a fine up to Rs 1 crore, or both.
- Debt Recovery Tribunal mooted as adjudicating authority for individuals/ unlimited liability entities
- National Company Law Tribunal to be adjudicating authority for companies/ limited liability entities
Under the new code, employees and workmen will have first right during liquidation of assets under the law followed by secured creditors.