Rajya Sabha Passes New Bankruptcy Code To Take On Defaulters Wednesday May 11,2016

The Rajya Sabha passed a new bankruptcy code on Wednesday May 11,2016

The insolvency and bankruptcy code, earlier passed by the Lok Sabha, will strengthen hands of lenders to recover outstanding debts by setting a deadline of 180 days for companies to pay or face liquidation.

Under the new law, a debtor could be jailed for up to five years for concealing property or defrauding creditors. Bankrupt individuals would be barred from contesting elections as well.

The new law virtually empowers creditors to decide whether a defaulter is declared insolvent or not, though legally their decision could still be challenged in the higher courts.

Currently, over 70,000 liquidation cases are pending in debt recovery tribunals and courts