New Delhi, Feb. 12 -- India's finance minister has stated in interviews that the Budget Session of Parliament is slated to amend the Insolvency and Bankruptcy Code (IBC) to clearly grant insolvent companies a "clean slate," with their civil and criminal liabilities wiped out, once a new management takes over.

However, the key question is whether legislative reform is sufficient, given the tenacity of tax authorities and investigative agencies.

Insolvency law has different policy priorities from tax and criminal law. On one hand, the goal is to resolve insolvent companies and maximize value for creditors (a significant part of which are public sector banks or PSBs), repurpose productive assets and free up bank capital.

On the other, the...