Wednesday, April 12, 2023

Better realisation for operational creditors following IBC revision

Operational creditors, such as government agencies and statutory bodies like the Employees' Provident Fund Organization (EPFO), are anticipated to benefit from the plan to rework the distribution formula for successful IBC cases that the government and the Insolvency & Bankruptcy Board of India (IBBI) have put together.

The draft to amend the Insolvency and Bankruptcy Code (IBC) that was put out for public comment suggested separating the resolution plan from how the money from the successful resolution applicant would be distributed.

Furthermore, to address worries over "biased dissemination" among lenders, a different cascade system has been proposed under which the loan bosses will get the returns up to the liquidation esteem accommodated under segment 153 of IBC. Then, it is suggested that any surplus be divided among all creditors in proportion to their unpaid claims. Additionally, the shareholders and partners of the corporate debtor, or company, would receive any surplus.

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