Promoters of small and medium enterprises (SMEs) should be allowed to bid for their companies against which insolvency proceedings have begun. A number of SMEs are going without bidders and the Centre allowing promoters of these enterprises to bid would be a positive step.

According to Mamta Binani, founder member of the All India Insolvency Professional Association (AIIPA), the association has already written to the Centre in this regard.

However, allowing promoters to bid for their own companies should come with reasonable restrictions so that the unscrupulous ones are kept away, she said.

“There are quite a number of SMEs which do not have bidders. Hopefully, the government makes an exception where promoters are allowed to bid. This would save employment as well as entrepreneurship,” she said during an interaction on ‘Insolvency and Bankruptcy Code, 2016’ organised jointly by the Financial Journalists Club and Press Club, Kolkata.

Incidentally, the Centre has already tabled a Bill that offers promoters of SMEs undergoing insolvency proceedings a month’s window to repay overdue loans and bid for their companies (under the Insolvency and Bankruptcy Code). This will be applicable where these promoters are sole bidders.

Binani also pointed out that three new national Company Law Tribunal benches — one each at Jaipur, Bhubaneswar and Kochi — will be coming up, thereby taking the total number of benches to 14.

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