India’s parliament passed a bill to overhaul archaic bankruptcy laws, taking Prime Minister Narendra Modi a step closer to fulfilling his pledge to make it easier to do business in the world’s fastest growing major economy, Bloomberg News reported yesterday. The upper house on Wednesday approved the Insolvency and Bankruptcy Act days after it was cleared in the lower house. The law will unify more than four overlapping sets of rules and aims to slash time taken to wind up a dying company or recover dues from a defaulter. The bill’s passage is one of the biggest steps in India’s battle to clean up $117 billion of stressed assets. The inability to shut loss-making companies and collect on dues had locked up funds at banks and damped lending and investment. The speed at which the bill was approved shows that battling bad debt is "on top of the government’s agenda," Varun Gupta, a partner at KPMG India, said in a statement. “The Code comes as a relief to workers and employees who are left unpaid by defaulting companies." Creditors in India recover about 25.7 cents on the dollar in the 4.3 years that it takes to resolve insolvency, World Bank data show, compared with 80.4 cents in the U.S. after less than half that time. The new law prescribes 180 days and empowers agencies to sell the creditor’s assets to repay debtors.
