New Delhi, Aug. 27 -- New investors in bankrupt companies will be spared the baggage of unpaid dues under a proposed amendment to India's insolvency law, a move aimed at speeding up corporate turnarounds and reducing legal uncertainty.

The amendment seeks to give buyers of distressed assets a clean slate by extinguishing all claims by creditors against a bankrupt company once an insolvency resolution plan is approved, said two persons aware of discussions in the government. This covers claims not specifically provided for in the resolution plan.

A specific provision to this effect has been included in the proposed Insolvency and Bankruptcy Code (Amendment) Bill that's currently before Parliament, they said, speaking on condition of anon...