Welcome changes to resolution rules

Welcome changes to resolution rules

A panel to review the Insolvency(दिवाला) and Bankruptcy(दिवालियापन) Code (IBC) has reportedly recommended treating homebuyers as financial creditors to provide them relief. It also wants easier rules for micro, small and medium enterprises (MSMEs) to allow well-intentioned(नेकनीयत) promoters to bid for their companies that are in the insolvency row. The recommendations(सिफारिशें/प्रशंसा) make sense.The IBC does not recognise the legitimate claims of homebuyers(घरेलू खरीदार।). The proposed amendment(संशोधन/सुधार) to treat damages — for a breach of contract — as financial debt will fix the flaw. It brings it in sync with the Real Estate (Regulation and Development) Act that has created rights in favour of homebuyers and, therefore, is welcome.Last year, the Insolvency and Bankruptcy Board of India had amended regulations to allow homebuyers to stake a claim on the amount they had paid to realtors. However, an amendment to the code is warranted to provide a statutory(वैधानिक/क़ानूनी) right to homebuyers.

The public policy goal in resolving(समाधान करना) bad loans is to maximise the realisation(वसूली/प्राप्ति) from selling off the assets of bankrupt entities(संस्थाओं/अस्तित्व). This goal is achieved by broadening participation in the bidding(बोली लगाना) for the assets(संपत्ति), encouraging long-term saving funds such as the Employees’ Provident Fund(भविष्य निधि) and the National Pension System to emulate the example of assorted(मिश्रित/चयनित) private equity firms that partner operational companies to bid for the stressed assets, with a view to exiting at an opportune time, to make a handsome return on their investment.Ruling out promoters — except in the case of fraudsters(धोखेबाजों) and wilful defaulters — does not meet the requirement of broadening the base of would-be bidders for stressed(प्रभाव डालना/ज़ोर देना) assets. The current set of rules that prohibit(रोक लगाना) the world’s largest steel producer from participating in the bid for stressed steel assets in India are not working in the way they were intended to. The sensible thing to do is to amend the rule.Revamp(सुधार) of the rules should be accompanied(साथ/सहित) by concerted efforts to mobilise dormant pools of savings to take part in asset purchases that promise to lead on to windfall gains in the future.

 

 

Important Vocabulary

1.Insolvency(दिवाला)
Synonyms: bankruptcy, breakdown, deterioration, implosion, inadequacy
Antonyms: accomplishment, achievement, advantage, ascent, benefit

2.Amendment(संशोधन/सुधार)
Synonyms: change, modification, reform, remedy, revision
Antonyms: damage, harm, hurt, injury, worsening

3.Statutory(वैधानिक/क़ानूनी)
Synonyms: lawful, legal, judicial, rightful
Antonyms: illegalil, legitimate, illicit, unlawful

4.Assorted(मिश्रित/चयनित)
Synonyms: sundry, diversified, mixed, motley, varied
Antonyms: like, same, similar, unvaried

5.Prohibit(रोक लगाना)
Synonyms: ban, block, constrain, enjoin, forbid
Antonyms: advance, aid, allow, approve, assist

6.Revamp(सुधार)
Synonyms: clean, overhaul, refurbish, rehabilitate, remake
Antonyms: break, damage, destroy, hurt, ruin

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