The government has notified the Insolvency and Bankruptcy Code (Amendment) Act, 2019, under which a deadline of 330 days has been set for completion of the corporate insolvency resolution process (CIRP), including litigation and other judicial processes.

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The new law aims to provide greater clarity on the permissibility of corporate restructuring schemes, rights and duties of authorised representatives of voters, manner of distribution of amounts among financial and operational creditors and the applicability of the resolution plan on all statutory authorities.

The "resolution plan" under the new law, mandates an explanation why the insolvency resolution of a corporate debtor is a growing concern and may include provisions for corporate restructuring -- by way of merger, amalgamation or demerger. This is to enable the market to come up with dynamic resolution plans for value maximisation.

It also mandates that votes of all financial creditors covered under Section 21(6A) shall be cast in accordance with the decision approved by the highest voting share (more than 50 per cent) of the financial creditors on present and voting basis. This will have a retrospective effect, where the resolution plan has not attained finality or has been appealed against.

The new law also makes the resolution plan binding on all stakeholders, including the central government, any state government or local authority, to whom a debt in respect of payment of dues may be owed.

Under it, the Committee of Creditors may decide to liquidate a corporate debtor any time after its constitution and before preparation of the Information Memorandum.