India relaxes bankruptcy rules

Author: Karry Lai | Published: 22 Jan 2018

India has revised a previous change that was made in November 2017 to its Insolvency and Bankruptcy Code (IBC) that barred errant promoters of defaulting companies from buying back assets sold under the bankruptcy process. Loan defaulters can now bid in buy-backs after paying off bad debts and interest.

Primary changes

Last year was an active year for the insolvency and bankruptcy area in India as changes were made to the Banking Regulation (Amendment) Ordinance 2017, including to give the Reserve Bank of India (RBI) authorisation to issue directions to banks to initiate insolvency resolution processes for defaults and stressed assets. The RBI has targeted 12 accounts that account for 25% of gross non-performing assets (NPAs) and a second list of about 40 defaulting companies for banks to begin the insolvency process under the IBC.

The ordinance put into place a time cap mechanism to resolve cases of unpaid debts...