Charge on Assets by Secured Creditors to Take Precedence Over Tax Authorities

The Ministry of Corporate Affairs proposes to amend the Insolvency and Bankruptcy Code (IBC), 2016, to place the charge of secured creditors on the assets of the Corporate Debtor above the tax authorities in the hierarchy of the creditors.

The definition of ‘secured creditors’ will be amended to exclude statutory dues to the government, including tax dues. It is speculated that the proposals are under inter-ministerial consultation and will be presented in the April to May period in Parliament after the national polls.