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Repeal SICA, abolish BIFR, says RBI panel

A Reserve Bank of India constituted advisory group on bankruptcy laws has recommended passing of a new legislation on a comprehensive bankruptcy code and introduction of a professional bankruptcy institution known as the 'Trustee'.

The group, apart from recommending a dedicated bench at every high court to deal with bankruptcy issues, also called for repealing the Sick Industrial Company (special provisions) Act and abolition of the Board for Industrial and Financial Restructuring, RBI said in a release in Bombay on Thursday, adding this report was submitted to the Standing Committee last week.

It has dealt with an effective trigger point for the operation of the bankruptcy code, special provisions for banks and financial institutions, cross border bankruptcy principles and an orderly and effective insolvency procedures.

Recommedations have been made after a review and an analysis of existing status of legislation in relation to international standards on bankruptcy laws and position obtaining in other countries.

The group suggested a need for a comprehensive corporate bankruptcy code, which would incorporate provisions relating to reorganisation on renegotiations, corporate insolvency leading to winding up and liquidation and settlement of all other related issues including cross-border and counter-claim settlement and cross border corporate insolvency.

On recommendations of repealing SICA and abolition of BIFR, the group said existing proceedings should be transferred to bankruptcy court having jurisdiction.

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