Giving 330 days for IBC resolution including litigation a right step: Abizer Diwanji, EY

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Earlier a 270-day period was given but had not mentioned time for litigation and the processes had dragged on for ages like in case of Essar, says Abizer Diwanji, Partner, EY. Excerpts from an interview with ETNOW.

What do the IBC Amendments actually mean and how crucial are they?
There were a few large issues which have been tackled here. One of the biggest issues which I have been talking about for a long time is that the time-bound process was quite frustrated by the legal system. The legal courts had interpreted that any time taken for litigation was excluded from the 270-day period for resolution.
Now according to the Amendment from, a maximum of 330 days including the period of litigation has been given, That puts a lot of stress on our courts to actually resolve the issues.
Let us take Essar for example. The whole process has been going on for two years because the time at which Essar was in litigation was not included in the 270-day deadline period. But now it says that the deadline has been extended to 330 days but will include any litigation period.
The other thing that has come about and which is good is a reflection of what has happened at the Jaypee home buyers. They have said that voting now is on a present basis. People who abstain from committee of creditors’ meeting, would not have their votes counted. People who want to abstain, cannot simply not attend the meeting and the process.
Third, it says that people who defend which is higher resolution value or liquidation value. It is ascending even for people who defend as long as the maximum numbers are achieved.
The IBC is very clear that financial creditors come first and then operational creditors. But as we have seen in the NCLAT the appellate tribunal has very often put the claims of operational creditors almost at par with financial creditors. That clarity is still pending. But it is a step in the right direction.

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