New Delhi, September 16
The Insolvency and Bankruptcy Board of India (IBBI) will soon allow resolution (sale) of part assets/businesses of corporates facing insolvency proceedings, Sandip Garg, Executive Director, said on Friday.
This will allow the resolution professional (RP) and the creditor to resolve part of the corporate debtor’s assets, in case no resolution plan has been received after the time has lapsed for submission of resolution plan.
“We are coming up with regulations soon that will allow resolution plans to be submitted for parts of the business. The relevant regulations will be issued soon ... likely in the next few days,” Garg told BusinessLine. The idea is to allow part businesses to be offered to different types of resolution applicants and then finally come up with a combined resolution plan with several resolution applicants, according to Garg.
It maybe recalled that IBBI had, in June this year, issued a discussion paper on this issue and proposed that part sale can be explored by resolution applicants and creditors only when no resolution plan is received within the timeline specified for submission of such plan. Public comments were sought on the paper, which proposed over dozen changes in the corporate insolvency resolution process (CIRP) to reduce delays and improve the resolution value.
The proposed regulation will help creditors recover at least part of dues under the scheme, opined experts, adding that the partial resolution of corporate debtor is certainly preferred as compared to liquidation as far as recovery of dues is concerned.
Ashok Haldia, Chairman, Indian Institute of Insolvency Professionals of ICAI, said the move will enable value realisation of part of assets which is otherwise blocked with other assets of the corporate debtor.
Siddharth Srivastava, Partner, Restructuring & Insolvency, Khaitan & Co, said: “The move will definitely evoke a lot of interest amongst the bidders since they would get the option to choose relevant business of the corporate debtor without the obligation of taking over the entire company. Having said that, while allowing the part sale, a critical balance has to be maintained and regulations need to be carefully crafted to ensure protection of going concern status of the corporate debtor in CIRP. At any rate, such flexibility in law shouldn’t be used by bidder to only cherry pick the best assets leaving the CD high and dry.”