Finance Minister Arun Jaitley has said that the ultimate aim of the new insolvency law is to preserve assets of firms which have not been able to service their debt rather than liquidating them.
“The intent of the Code is not the liquidation of assets but to preserve their value, either through existing promoters or through bringing in new promoters or partners,” Jaitley said while addressing a summit organised by the Confederation of Indian Industry
(CII) in Mumbai.
However, in case the debtor fails to service his debt on time, he has to make way for somebody else, Jaitley added.
Stating that the insolvency and bankruptcy code (IBC) has reversed the relationship between debtor and creditor, Jaitley said the old regime by which the creditor would get tired chasing the debtor and end up getting nothing, is now over. “For years, we lived in a system which allowed debtors to allow their assets to be rusted,” Jaitley recalled.
He further assured that special efforts are being made to ensure that the infrastructure requirements of various institutions under the IBC are in consonance with the requirements of this particular law. “Now that the law is put in place and the competent authority National Company Law Tribunal has been constituted, we are making special efforts to make sure that the infrastructure is strengthened and brought in consonance with the requirements of this particular law,” Jaitley said.
Over a period of time, we have to see, what improvements in the law are required to make sure that the purpose for which it has been created is subserved, Jaitley added.