Rajya Sabha passes Insolvency and Bankruptcy Code Bill

New Delhi: The Rajya Sabha on Tuesday passed the Insolvency and Bankruptcy Code (Amendment) Bill, 2021 following a brief discussion amid ruckus created by Opposition parties over the Pegasus snooping row and other issues.

The house was adjourned for the day on Tuesday amid continuous protest by opposition parties over their demand for a discussion on the use of Pegasus spyware, farmers' agitation against farm reform laws and other issues.

The Lok Sabha had passed the bill on July 28.

The Insolvency and Bankruptcy Code (Amendment) Bill, 2021 provides for a pre-packaged insolvency resolution mechanism for micro, small and medium enterprises (MSMEs).

After moving the bill for consideration, Finance Minister Nirmala Sitharaman said "this bill has been brought keeping in mind the situation in which MSMEs require a lot of help post the pandemic..we are increasing the threshold and coming up with a pre-pack."

"It is less costly..it is hybrid in nature...the debtor will still be in control and the creditors will be working together and, therefore, it is actually going to cut the cost and speed up the process because the whole thing will be over in 120 days," she said.

She urged all members of the House to consider and pass the bill.

After a brief debate, Ms Sitharaman in her reply said, "I will ensure we are also working to fill the vacancies in the (NCLT) benches..So, I do not want you to worry about vacancies and causing any further delay."

Addressing a query of Amar Patnaik (BJD), she said, "The process can be initiated only with the consent of 66 per cent of unregulated financial creditors and consent of special majority of shareholders... Also, civil and criminal liability is attached to any act of wilful misinformation or omission of information."

"Insolvency professional is tasked with a clear duty to report mismanagement on fraudulent practices," the finance minister added.

She said that pre-package is flexible, cost-effective, time-bound and therefore very suitable for MSMEs.