Individuals who have been declared insolvent might soon be prohibited from holding or running for public office, The Indian Express reports.
The Insolvency and Bankruptcy Board of India (IBBI) and the Ministry of Corporate Affairs (MCA) are in favour of the move, sources told the paper.
There is also a plan to disallow insolvent individuals from being the personal guarantor to any company, the report said. “We have discussed that they (individuals declared insolvent) should not be allowed to hold or run for any public office. The repayment plan and schedules also have to be thought of. Because unlike corporate insolvency, here no one is taking over,” the article quotes a source as saying.
Moneycontrol could not independently verify the story.
The Union Cabinet had on December 11 approved amendments to the Insolvency and Bankruptcy Code (IBC). One of the changes include ring-fencing corporate debtors from criminal proceedings in relation to offenses committed by a company’s previous promoters or managers.
The government also recently brought corporate debtors’ personal guarantors under the purview of the IBC.
The latter has a provision for personal insolvency proceedings, but had so far not addressed the subject. It will take up to three years to frame the final rules on personal insolvency, sources told the newspaper.
“If individuals themselves approach the courts for initiation of insolvency against them, we will also have to ensure that there is no fraud there,” the report quotes an MCA official as saying.
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