After the new bankruptcy law reversed the debtor-creditor relationship, India's Finance Minister Arun Jaitley said that defaulters would now have to either pay up or make way for new entrepreneurs. Jaitley also addressed fears that businesses would come to a standstill during the insolvency proceedings. Speaking at the National Conference on Insolvency and Bankruptcy, he said, “The message in the legislation is now loud and clear; debtors will have to make sure their debts are serviced. The alternative mechanism is where you exit by taking a partner, or new entrepreneurs come in and protect the assets.”
He said the government would wait and watch out for judicial pronouncements under the Insolvency and Bankruptcy Code before seeing whether it needed improvement. “Legislation is the skeletal structure, the flesh and blood is provided by judicial interpretation. We will have to wait to see how much of the law is made effective by pronouncements of the tribunal and then look at improvement,” Jaitley said.
He added that now that the law is in place and the National Company Law Tribunal has been constituted, one way of ensuring that the process is effective is by adhering to the timelines provided in the law.
