The Bankruptcy Law Board made some changes in the bankruptcy rules. Their claim is that if a company goes to the NCLT after failing to repay a loan, it aims to bring more transparency in its revival or rollout process.
Sources claim that there are two significant changes: the terms of appointment of Resolution Professionals (RPs) and certain responsibilities and the obligation to hold those responsible for the bankruptcy of the company. When the patient goes to the NCLT, the responsibility goes to the RP. He examined the financial situation and offered a revival. Under the new system, no one associated with the company concerned can become an RP within three years before going bankrupt. Ujjaini Chatterjee, a partner at Sharma and Sharma, a legal advisory firm, said, “This will bring more transparency to the work of the RP. Guru has the responsibility on them. This change is to neutralize the RP’s move. “
In addition, the RP has to report to the NCLT within 90 days of the commencement of work after examining the role of the officers involved in the management of the company until two years before the bankruptcy. It should also inform those involved in the transaction responsible for bankruptcy. Compensation must be recommended. “The new system will be much more effective in protecting the interests of lenders,” Ujjaini said.