The Bankruptcy Bill passed by the lower house on Monday would completely overhaul century-old laws that regulate insolvency.
The proposed uniform law will streamline the existing insolvency process which depends on 11 different laws.
As per the bill, if a business fails then the case of insolvency will have to be resolved within a period 180 days, which can be extended by another 90 days.
The bill also provides for fast-track resolution of corporate insolvency within 90 days.
The law will protect workmen and employees in case the employer files for bankruptcy.
Workers’ dues will have to cleared first and the bill mandates payment of wages to workers for two years.
However, the bill is yet to be cleared by the Rajya Sabha where the NDA government does not have the majority.
The government will try to get the bill passed in the Rajya Sabha on Monday or Tuesday.