Policy

Liquidation: All public notices of auctions to be published on IBBI’s online platform from Oct 1

K.R.Srivats New Delhi | Updated on October 05, 2021

Move to make process more transparent

Insolvency regulator IBBI has now made it mandatory for all public notices of auctions of every liquidated asset to be published in its centralised platform — ibbi.gov.in — from October 1.

It has also amended its liquidation-related regulations to stipulate that liquidators have to provide reasons of rejection of the highest bid and need to mention those reasons in the next progress report to be submitted to the adjudicating authority (National Company Law Tribunal).

The latest set of changes to liquidation process regulations will make the entire process more transparent and liquidators have been given greater independence in the liquidation process, say Insolvency law experts.

Improve participation

Meghna Mishra, Partner, Karanjawala & Co, said that the centralised electronic platform envisaged directs that all particulars in relation to assets being liquidated be uploaded which should help in better visibility, increase the participation of prospective buyers, help get a better realisation of assets, and expedite the entire process.

“This is one more positive step taken by the government which shall bring further relief to all stakeholders,” she said.

Better realisation

Pritika Kumar, Founder and Sentinel Counsel, Cornellia Chambers, said that the move to demarcate a centralised platform for hosting all public notices of auctions of liquidation assets of ongoing liquidation processes is going to improve visibility for the assets being sold, and will certainly expedite the process and lead to better realisation from sale of assets.

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“This was long overdue,” she said.

Autonomy for liquidator

Sawant Singh, Partner, Phoenix Legal, said that publishing the auction notices on an online public platform will certainly expand the number of buyers participating in the auction process and increase the realisation of the value of the corporate debtor’s assets.

He said the latest amendments to the Liquidation Process Regulations focus on providing wider autonomy to the liquidator to carry out the liquidation process, along with the formation of a consultation committee consisting of representatives of all stakeholders.

“The active participation and guidance of the stakeholders in the sale process will hopefully iron out issues relating to assimilation of information which used to crop us in the past, and aid the liquidator for effective sale of assets,” he said.

New amendments

As per the liquidation process laid down in the regulations, the liquidator is required to prepare terms and conditions of sale, including reserve price, earnest money deposit as well as pre-bid qualifications, if any. The latest amendment clarifies that the liquidator will not require payment of non-refundable deposit or fee for participation in auction under the liquidation process. It further says that earnest money deposit for participation in an auction under the liquidation process will not exceed 10 per cent of the reserved price.

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The latest set of amendments to liquidation regulations also clarifies that the consultation committee (constituted by the liquidator based on the list of stakeholders) will advise the liquidator on matters relating to appointment of professionals and their remuneration; and sale of assets, including manner of sale, pre-bid qualifications, reserve price, amount of earnest money deposit, and marketing strategy.

Published on October 04, 2021

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