MCA proposes Changes to IBC, 2016

Recently, the Ministry of Corporate Affairs (MCA) released a discussion paper that proposes several changes to the Insolvency & Bankruptcy Code (IBC), 2016.

Proposed Changes

  • The discussion paper acknowledges concerns among creditors regarding inequitable distribution.
  • It says there is a need to devise an objective formula so that the distribution is fair and equitable for all creditors.
  • It proposes a statutory scheme wherein the liquidation value will be distributed in accordance with the waterfall mechanism under Section 53.
  • However, any surplus over such liquidation value shall be pro-rated amongst all the creditors in ratio of their unsatisfied claims.

Expected Impact

  • Equity ....
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