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Summary of the Recommendations of the Bankruptcy Law Reforms Committee (BLRC)

Dated:- 4-11-2015 - Following is the The Report of the BLRC is in two parts: i. Rationale and Design/Recommendations; ii. A comprehensive draft Insolvency and Bankruptcy Bill covering all entities. The draft Bill has consolidated the existing laws relating to insolvency of companies, limited liability entities (including limited liability partnerships and other entities with limited liability), unlimited liability partnerships and individuals which are presently scattered in a number of legislat .....

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, distinguish malfeasance vis-a-vis business failure and clearly allocate losses in macroeconomic downturns. The major recommendations of the Report are as follows: i. Insolvency Regulator: The Bill proposes to establish an Insolvency Regulator to exercise regulatory oversight over insolvency professionals, insolvency professional agencies and informational utilities. ii. Insolvency Adjudicating Authority: The Adjudicating Authority will have the jurisdiction to hear and dispose of cases by or a .....

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). c. NCLAT shall be the appellate authority to hear appeals arising out of the orders passed by the Regulator in respect of insolvency professionals or information utilities. iii. Insolvency Professionals: The draft Bill proposes to regulate insolvency professionals and insolvency professional agencies. Under Regulator s oversight, these agencies will develop professional standards, codes of ethics and exercise a disciplinary role over errant members leading to the development of a competitive .....

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Entities: The draft Bill proposes to revamp the revival/re-organisation regime applicable to financially distressed companies and limited liability entities; and the insolvency related liquidation regime applicable to companies and limited liability entities. a. The draft Bill lays down a clear, coherent and speedy process for early identification of financial distress and revival of the companies and limited liability entities if the underlying business is found to be viable. b. The draft Bill .....

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the financial creditors. Once the plan is approved, it would require sanction of the Adjudicating Authority. If an insolvency resolution plan is rejected, the Adjudicating Authority will make an order for the liquidation. d. The draft Bill also provides for a fast track insolvency resolution process which may be applicable to certain categories of entities. In such a case, the insolvency resolution process has to be completed within a period of 90 days from the trigger date. However, on request .....

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s and unlimited liability partnerships also. As a precursor to a bankruptcy process, the draft Bill envisages two distinct processes under this Part, namely, Fresh Start and Insolvency Resolution. a. In the Fresh Start process, indigent individuals with income and assets lesser than specified thresholds (annual gross income does not exceed ₹ 60,000 and aggregate value of assets does not exceed ₹ 20,000) shall be eligible to apply for a discharge from their qualifying debts (i.e. debt .....

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