Explanation:

 The Insolvency and Bankruptcy Code (Amendment) Bill, 2017, was passed by the Lok Sabha on December 29, 2017, and by the Rajya Sabha on January 2, 2018. It replaces the IBC (Amendment) Bill, 2017, which was promulgated on November 23, 2017.
In the CIRP the Committee of Creditors (CoC) invites resolution plans from resolution applicants, and may select one of these plans. The Code originally does not specify any restrictions on who these resolution applicants might be. The Bill has declared that some persons are ineligible to submit resolution plans:
(i) an undischarged insolvent;
(ii) a “wilful defaulter”;
(iii) a borrower whose account has been identified as a non-performing asset for over a year and who has not repaid the amount before submitting a plan;
(iv) a person convicted of an offence punishable with two or more years of imprisonment;
(v) a person disqualified as a director under the Companies Act, 2013;
(vi) a person prohibited from trading in securities;
(vii) a person who is the promoter or in the management of a company which has indulged in undervalued, preferential, or fraudulent transactions;
(viii) a person who has given guarantee on a liability of the defaulting company undergoing resolution or liquidation, and has not honoured the guarantee;

(ix) a person who is subject to any of the above disabilities in any jurisdiction outside India; or
(x) a person who has a connected person disqualified in any manner above.
The thrust of the Bill is to prevent a range of undesirable persons from bidding for the debtor. The Bill may prevent promoters from bidding for their own firms. A resolution plan would typically involve significant haircuts on the parts of the financial and operational creditors. Thus, allowing a promoter to bid without restriction would mean countenancing a situation where an owner, having driven a firm into insolvency, is now able to purchase it back at a discount. This can lead to a situation of moral hazard, where incompetent or fraudulent promoters are effectively rewarded with the control of their company, leaving the creditors to write off their debts.
The Bill, thus, seeks to achieve a balanced approach, enabling the CoC to avoid imprudent transactions, while preserving its freedom to choose the best resolution plan from amongst all the applicants.