India’s insolvency framework could soon see a significant shift, with the proposed amendments to the Insolvency and Bankruptcy Code (IBC) introducing a mechanism that allows certain defaulting promoters to retain control of their companies during the resolution process, The Times of India reported on April 7.
The system, according to the report (by Mayur Shetty), will be subject to creditor supervision.
The IBC, in its original design, was aimed at displacing promoters of companies that had defaulted on loans. Section 29A explicitly prevented wilful defaulters and errant promoters from bidding for their own assets. Under the Corporate Insolvency Resolution Process (CIRP), management control was transferred to a resolution professional,…