Insolvency & Bankruptcy Code – 2016 – Opportunities for Valuer 1
IN PRESENT SCENARIO, THERE ARE (4)FOUR ACTS ENACTED / AMENDED / WHICH CREATS OPPERTUNITY FOR VALUER 1. The Real Estate (Regulation & Development) Act, 2016 2. The Benami Transaction (Prohibition) Amendment Act – 2016 3. The Enemy Property (Amendment and Validation) Act, 2017 4. The Insolvency And Bankruptcy Code – 2016 WWW.PARAGSHETH.COM
THE REAL ESTATE (REGULATION & DEVELOPMENT) ACT, 2016 The Real Estate (Regulation and Development) Act, 2016 is an Act of the Parliament of India which seeks to protect home-buyers as well as help boost investments in the real estate industry. The bill was passed by the Rajya Sabha on 10 March 2016 and by the Lok Sabha on 15 March 2016. The Act came into force from 1 May 2016 with 59 of 92 sections notified. RERA Act was implemented by 01.05.2017. The Central and state governments are liable to notify the Rules under the Act within a statutory period of six months. WWW.PARAGSHETH.COM
THE BENAMI TRANSACTION (PROHIBITION) AMENDMENT ACT – 2016 Rather than hoarding the black money in cash, the tax evader invest their accumulated illegal money in buying BENAMI properties. The whole process affects the revenue generation of government hampering growth and development of the state. due to lack of resources. A tough law against BENAMI properties was the need of the hour to check corruption Finally, The BENAMI Transaction (Prohibition) Amendment Act – 2016 passed in the November-2016 The New BENAMI Transaction (Prohibition) Amendment Act came into effect from 1 st November, 2016. It prohibits illegal BENAMI transactions, under which up to seven years of imprisonment and penalty for those indulging in such activities could be handed out. WWW.PARAGSHETH.COM
ENEMY PROPERTY(AMENDMENT AND VALIDATION) ACT, 2017 The Enemy Property Act, 1968 is an Act of the Parliament of India, which provides for the continuous vesting of enemy property in the Custodian. The Central Government through the Custodian of Enemy Property for India is in possession of enemy properties spread across many states in the country. In addition, there are also movable properties categorized as enemy properties. Any property belonging to or held on the behalf of the successors of those who moved to Pakistan or China during partition will have no right to claim what they left in India. Properties were earlier left with custodians. After the Indo-Pak war of 1965, the 'Enemy Property Act' was enacted in 1968 in order to regulate these properties and keep a tab on the powers custodians have. To avoid any litigation and encroachments because of the original law, necessary amendments have been imposed on it. WWW.PARAGSHETH.COM
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SHRI NARENDRA MODI, HON’BLE PRIME MINISTER OF INDIA IN HIS ADDRESS AT NATIONAL INITIATIVE TOWARDS STRENGTHENING ARBITRATION AND ENFORCEMENT IN INDIA, 23RD OCTOBER, 2016 : “Towards this end, we have initiated far-reaching legal reforms. Over a thousand archaic laws have been scrapped. We have enacted a comprehensive Insolvency and Bankruptcy Code, 2016, implemented the National Company Law Tribunals....... ……… .Further, in harmony with the Bankruptcy Code, we have amended the SARFAESI and DRT Acts this year to suit the changing credit landscape and augment ease of doing business. ” WWW.PARAGSHETH.COM
SHRI ARUN JAITLEY, HON’BLE MINISTER OF FINANCE AND CORPORATE AFFAIRS IN HIS ADDRESS AT THE INAUGURATION OF THE NISM CAMPUS, 24TH DECEMBER, 2016: “We started the year with the implementation ..... The Insolvency and Bankruptcy Law not only got passed, but by the end of the year, got effectively implemented. ” Ministry of Finance, Press Release dated 11th May, 2016: “This (The Insolvency and Bankruptcy Code, 2016) is considered as the biggest economic reform next only to GST.” WWW.PARAGSHETH.COM
INSOLVENCY, BANKRUPTCY& LIQUIDATION WWW.PARAGSHETH.COM
WHY “CODE” & NOT AN “ACT” ??? A Code, as per Black’s Law Dictionary - - A Collection or Compendium of Laws Systematic and comprehensive compilation of : Laws Rules & Regulations that are Consolidated and classified for A Particular Subject WWW.PARAGSHETH.COM
THE CODES OF INDIA The Indian Penal Code, 1860 The Code of Civil Procedure, 1908 The Code of Criminal Procedure, 1973 The Insolvency and Bankruptcy Code, 2016 (The IBC 2016) Land Revenue Code of Various States WWW.PARAGSHETH.COM
THE IBC APPLIES TO Companies Company Governed by any Special Act LLPs Such Other Bodies as others notified Partnership Firm & Individuals WWW.PARAGSHETH.COM
THE INSOLVENCY AND BANKRUPTCY BOARD OF INDIA (IBBI) WAS ESTABLISHED ON 1ST OCTOBER, 2016. IT IS USEFUL TO CHRONICLE THE CRITICAL STEPS LEADING TO ESTABLISHMENT OF THE IBBI AND THE STEPS TAKEN THEREAFTER WWW.PARAGSHETH.COM
THE INSOLVENCY AND BANKRUPTCY BOARD OF INDIA (IBBI) WAS ESTABLISHED ON 1ST OCTOBER, 2016. IT IS USEFUL TO CHRONICLE THE CRITICAL STEPS LEADING TO ESTABLISHMENT OF THE IBBI AND THE STEPS TAKEN THEREAFTER : WWW.PARAGSHETH.COM
THE INSOLVENCY AND BANKRUPTCY CODE, 2016. 5 Parts- 7 Chapters in each Part II,III,IV 255 Sections 11 Schedules (Sections 245 to 255) 9 Ammendments WWW.PARAGSHETH.COM
THE INSOLVENCY AND BANKRUPTCY CODE, 2016. o Part I – Preliminary – Sections 1 to 3 o Part II - Insolvency Resolution and Liquidation for Corporate Persons - 7 Chapter, Sections 4 to 77, Section 5 Definitions o Part III – Insolvency Resolution and Bankruptcy for Individuals and Partnership Firms – 7 Chapters, , sections 78 to 187, Section – 79 - Definitions o Part IV – Regulation of Insolvency Professionals, Agencies and Information Utilities – 7 Chapters, sections 188 to 223 o Part V – Miscellaneous- Sections 224 to 255 (Section 224-255 enables amendments in other statues, 11 legislations) WWW.PARAGSHETH.COM
REPEAL OF ENACTMENT AND SAVINGS BY THE IBC 2016 (S 243) The Presidency Towns Insolvency Act, 1909 The Provincial Insolvency Act- 1920 WWW.PARAGSHETH.COM
11 ENACTMENT AMENDED BY THE IBC 2016 (S 245 – S 255) SCHEDULE FIRST TO ELEVENTH) Schedule Suitably amended Respective Act 1 The Indian Partnership Act,1932 2 The Central Excise Act, 1944 3 The Income-Tax Act, 1961 4 The Customs Act , 1962 5 The Recovery of Debts due to Banks and Financial Institution Act, 1993 6 The Finance Act, 1994 7 The Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act – 2002 8 The Sick Industrial Companies (Special Provisions) Repeal Act – 2003 9 The Payment & Settlement Act, 2007 10 The Limited Liability Partnership Act, 2008 11 The Companies Act, 2013 WWW.PARAGSHETH.COM
IMPACT OF THE IBC 2016 BIFR & SICA go off completely Corporate Resolution comes under NCLT Tight timelines under the new Law- Entire Process of Resolution to be over in 180 to 270 Days May lead to greater financial discipline Creditor have an upper hand in Resolution Plans Moratorium is not indefinite – Limited Moratorium If revival doesn’t work out, entity is mandatorily goes in to Liquidation. Companies and Guarantors can be both brought under common forum – NCLT / DRT While borrowers may file resolution applications seeking moratorium, But borrower, will have to face the threat of Liquidation & Bankruptcy Can Debtors under banker – driven restrictions also go for NCLT / DRT resolution – Yes, in view of mandatory timelines , the case may reach bankruptcy stage faster Accelerating provisioning – Faster transition in to a case of loss assets WWW.PARAGSHETH.COM
TIME LINE 180 days 270 days 90 days (Maximum) FAST TRACK : 45 days 135 days 90 days (One time) Adjudicating Authority after admission of application shall, by an order Cause a Public Appoint Interim Declare a Announcement Resolution Professional Moratorium WWW.PARAGSHETH.COM
ABOUT ACT : PART II - INSOLVENCY RESOLUTION AND LIQUIDATION FOR CORPORATE PERSONS Chapter Chapter Title I PRELIMINARY II CORPORATE INSOLVENCY RESOLUTION PROCESS III LIQUIDATION PROCESS IV FAST TRACK CORPORATE INSOLVENCY RESOLUTION PROCESS V VOLUNTARY LIQUIDATION OF CORPORATE PERSONS VI ADJUDICATING AUTHORITY FOR CORPORATE PERSONS VII OFFENCES AND PENALTIES WWW.PARAGSHETH.COM
ABOUT ACT : PART III - INSOLVENCY RESOLUTION AND BANKRUPTCY FOR INDIVIDUALS AND PARTNERSHIP FIRMS Chapter Chapter Title I PRELIMINARY II FRESH START PROCESS III INSOLVENCY RESOLUTION PROCESS IV BANKRUPTCY ORDER FOR INDIVIDUALS AND PARTNERSHIP FIRMS V ADMINISTRATION AND DISTRIBUTION OF THE ESTATE OF THE BANKRUPT VI ADJUDICATING AUTHORITY FOR INDIVIDUALS AND PARTNERSHIP FIRMS VII OFFENCES AND PENALTIES WWW.PARAGSHETH.COM
ABOUT ACT : PART IV - REGULATION OF INSOLVENCY PROFESSIONALS, AGENCIES AND INFORMATION UTILITIES Chapter Chapter Title I THE INSOLVENCY AND BANKRUPTCY BOARD OF INDIA II POWERS AND FUNCTIONS OF THE BOARD III INSOLVENCY PROFESSIONAL AGENCIES IV INSOLVENCY PROFESSIONALS V INFORMATION UTILITIES VI INSPECTION AND INVESTIGATION VII FINANCE, ACCOUNTS AND AUDIT PART V – Miscellaneous WWW.PARAGSHETH.COM
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