MCA proposes IBC tweaks to put resolution on fast track

The government on Wednesday proposed a slew of changes to the Insolvency and Bankruptcy Code (IBC), including fast-tracking the resolution process and expanding the scope of the pre-packaged framework.

A discussion paper floated by the Ministry of Corporate Affairs proposes to introduce Fast Track Corporate Insolvency (FIRP) through which the corporate debtors of a company can choose to opt for resolution outside the judicial process.

The proposed changes seek to allow unrelated financial creditors of a corporate debtor to select and approve a resolution plan through an informal out-of-court process and involve the Adjudicating Authority only for its final approval or a moratorium, if needed.


The FIRP is being proposed to address the issue of pendency of IBC cases, which has dragged resolution timelines. The option will be available only in cases below a certain asset value threshold notified by the government.

The government has also proposed to give National Company Law Tribunals (NCLTs) and Debt Recovery Tribunals (DRTs) powers to penalise individuals who "contravene with IBC".

It also seeks to widen the pre-packaged insolvency resolution process (PIRP) to include a certain category of corporate debtors, in addition to MSMEs. Under PIRP, the creditors can scout for potential buyers for the debtor company without having to put the company through a moratorium under IBC.

These proposals are based on recommendations given by an eight-member expert committee headed by former secretary to GoI K P Krishnan.

Stakeholders can submit their views on the paper to the MCA by February7.

The ministry also proposed to leverage technology for better management and supervision of IBC cases.