Government-appointed Bankruptcy Law Committee today proposed a swift process and timeline of 180 days to deal with insolvency that may arise on account of business failures or economic downturns.
The draft legislation prepared by the panel also proposes early identification of financial distress so that steps could be taken to revive the ailing company.
T K Vishwnathan, former Law Secretary, presented the Bankruptcy Law Committee Report to Finance Minister Arun Jaitley here.
"The Bill seeks to improve the handling of conflicts between creditors and debtors, avoid destruction of value, distinguish malfeasance vis-a-vis business failure and clearly allocate losses in macroeconomic downturns," the report said.
The draft Bill prescribes "a swift process and timeline of 180 days" for dealing with applications for insolvency resolution.
It also lays down a "clear, coherent and speedy process" for early identification of financial distress and revival of the companies.
The draft proposes to establish an Insolvency Regulator to exercise regulatory oversight on insolvency professionals and agencies.
"The Insolvency Adjudicating Authority will have the jurisdiction to hear and dispose of cases by or against the debtor," it said and added the Debt Recovery Tribunal should be the Adjudicating Authority with jurisdiction over individuals and unlimited liability partnership firms.
The report recommends a transition provision during which Central Government will exercise all powers of Regulator till the time the Regulator is established.
The National Company Law Tribunal (NCLT) should be the Adjudicating Authority with jurisdiction over companies, and limited liability entities, it added.
The draft Bill has consolidated the existing laws relating to insolvency of companies, limited liability entities, unlimited liability partnerships and individuals which are presently scattered in a number of legislations, into a single legislation.
Meanwhile, Finance Ministry said that after taking the suggestions into consideration government will take a final decision on the report and introduce the Bill in Parliament.
The Ministry has invited comments and suggestions on the report available on its website till November 19.
The draft proposes for information utilities which would collect authenticate and disseminate financial information from listed companies. It also made a case to revamp the revival/re-organisation regime applicable to financially distressed companies.