New Delhi, Mar 6 (KNN) Parliament's Standing Committee on Finance has said that Micro Small and Medium Enterprises (MSMEs) should be cleared on a priority basis during the course of the resolution process.

The committee in its report tabled in the Parliament on Wednesday said that on the Insolvency and Bankruptcy (Second Amendment) Bill, 2019, said certain amendments in the bill may lead to over-regulation of suppliers particularly MSMEs and hence, it must be avoided.

The committee further added delegated legislation through rules set-up by Insolvency and Bankruptcy Board of India (IBBI) should be adhered to address the needs and concerns of stakeholders.

"In this context, the Committee would like to emphasise that the payments due to MSMEs, who are operational creditors not included in the Committee of Creditors (CoC), should be ensured on priority in the course of the resolution process itself before the liquidation stage kicks in. The Committee would therefore recommend that the Clause 5(b) (2A) should accordingly be deleted," the report said.

''To make the IBC process smoother and in hope of a probable revival, suppliers cannot be burdened with overly restrictive conditions,'' the report added.

The report also recommended that market forces should resolve whether a supplier decides to supply to a corporate debtor, as there are limited resources available and each supplier has a limited capacity, which needs to be channelised and allocated in the best interest of the economy and not directed solely towards keeping the corporate debtor alive.

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