Insolvency and Bankruptcy Code (Second Amendment) Act, 2018.

Aug 20, 2018 | by Avantis RegTech Legal Research Team

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Ministry of  Law  and Justice vide notification dated August,17,2018 has issued the the Insolvency and Bankruptcy Code (Second Amendment) Act, 2018 further to amend d the Insolvency and Bankruptcy Code, 2016.

Important Amendments are following-

                                I.            Amendment in Section 5

 after clause (5), the following clause shall be inserted, namely:— '(5A) "corporate guarantor" means a corporate person who is the surety in a contract of guarantee to a corporate debtor;’;


                              II.            Amendment in Section 7

. In section 7 of the principal Act, in sub-section (1), for the words "other financial creditors", the words "other financial creditors, or any other person on behalf of the financial creditor, as may be notified by the Central Government," shall be substituted.


                            III.            Amendment in Section 9

 (a) in sub-section (3),— (i) in clause (c), for the words "by the corporate debtor; and", the words "by the corporate debtor, if available;" shall be substituted;

(ii) for clause (d), the following clauses shall be substituted, namely:— "(d) a copy of any record with information utility confirming that there is no payment of an unpaid operational debt by the corporate debtor, if available; and (e) any other proof confirming that there is no payment of an unpaid operational debt by the corporate debtor or such other information, as may be prescribed."


                            IV.            Amendment in Section 10

. In section 10 of the principal Act,—

(a) for sub-section (3), the following sub-section shall be substituted, namely:—

"(3) The corporate applicant shall, along with the application, furnish—

(a) the information relating to its books of account and such other documents for such period as may be specified;

(b) the information relating to the resolution professional proposed to be appointed as an interim resolution professional; and

(c) the special resolution passed by shareholders of the corporate debtor or the resolution passed by at least three-fourth of the total number of partners of the corporate debtor, as the case may be, approving filing of the application.";


Insertion of New Sections

Ø  Section 12 A

. After section 12 of the principal Act, the following section shall be inserted, namely:— "

12A. The Adjudicating Authority may allow the withdrawal of application admitted under section 7 or section 9 or section 10, on an application made by the applicant with the approval of ninety per cent voting share of the committee of creditors, in such manner as may be specified.".


Ø  Section 25 A

.After section 25 of the principal Act, the following section shall be inserted, namely:-— '25A

. (1) The authorised representative under sub-section (6) or sub-section (6A) of section 21 or sub-section (5) of section 24 shall have the right to participate and vote in meetings of the committee of creditors on behalf of the financial creditor he represents in accordance with the prior voting instructions of such creditors obtained through physical or electronic means.

 (2) It shall be the duty of the authorised representative to circulate the agenda and minutes of the meeting of the committee of creditors to the financial creditor he represents.

(3) The authorised representative shall not act against the interest of the financial creditor he represents and shall always act in accordance with their prior instructions: Provided that if the authorised representative represents several financial creditors, then he shall cast his vote in respect of each financial creditor in accordance with instructions received from each financial creditor, to the extent of his voting share: Provided further that if any financial creditor does not give prior instructions through physical or electronic means, the authorised representative shall abstain from voting on behalf of such creditor. (4) The authorised representative shall file with the committee of creditors any instructions received by way of physical or electronic means, from the financial creditor he represents, for voting in accordance therewith, to ensure that the appropriate voting instructions of the financial creditor he represents is correctly recorded by the interim resolution professional or resolution professional, as the case may be.

[26 of 2018]




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