Over a year after its enactment, the Insolvency and Bankruptcy Code has kicked off more debates and controversy than meaningful resolution for stressed asset.

Last year, the RBI had referred the first set of 12 large stressed assets for resolution under IBC. Of this, only one case involving Electrosteel Steels has been resolved, with banks writing off over 60 per cent of their dues. While the government has been more active amending the law, the teething trouble is quite evident.

In its current form, the Code has not delivered on both its promises — maximising asset value and avoiding litigation. Selecting the right set of candidates to bid for the stressed assets has not been a big challenge given the limited response from corporate houses. In this scenario, the government would have done well to rely on time-tested online open bidding as done in the case of telecom spectrum auction rather than choosing close bidding process.

In 2016, the government sold spectrum worth ₹66,000 crore in matter of five days. More recently, the Board of Control for Cricket in India raked in ₹6,000 crore in three days through online auctioning of media rights for cricket matches played in India. It is time for the government to modify the existing IBC norms to facilitate online bidding. The committee of creditors can short-list the eligible bidders based on their past record and make them bid online.

The highest bid should be displayed on the computer screen of contestants and they should be given the option of improving their bids every one hour. The online bidding can be conducted for more than a day so that bidders can consult with the promoters to rework strategies and revise bids upward. The open online bidding will also help get better price for the asset put on the block. It will not only reduce litigation but also bring in the much needed transparency.

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