Marketing assets

Assets of bankrupt companies can be sold in part: IBBI

NEW DELHI: The Insolvency and Bankruptcy Board of India (IBBI) has said its latest company rescue regulations allow administrators and lenders of bankrupt companies to invite bids for the individual assets of the ailing company if they did not receive any rescue plan for the entity as a whole the first time.

IBBI said in a statement that the idea is to maximize the value of the resolution. Amendments to the regulations on the “insolvency resolution process for legal persons” published last Friday allow the resolution professional and the creditors’ committee to issue a second request for a resolution plan for the sale of one or more multiple debtor company assets in cases where no resolution plan has been received for the entire debtor company.

“This allows a resolution plan to include the sale of one or more assets of the debtor company to one or more successful resolution applicants submitting resolution plans for those assets and providing for appropriate treatment of the remaining assets,” a IBBI said in a statement.

The regulations also help improve the value received in the resolution plan, IBBI said.

The amendment provides for the formulation of a strategy for marketing the assets of the failed business to a wider and targeted audience of potential bidders.

It also allows the asset to stay in the market longer, as the call for expressions of interest has been brought forward to the 60th day from the date of the start of insolvency. Changes have also been introduced to provide more relevant information to people wishing to express interest, IBBI said.

With the aim of reducing delays in the process and improving the efficiency of the time available, the amendment allows creditors to consider whether they wish to explore the option of “compromise or settlement” – a restructuring option in under the Companies Act – and seek the same from the court when applying for a winding up order.

If creditors decide to explore “compromise or arrangement” – the option outside the Insolvency and Bankruptcy Code (IBC) – then they must explore this option during the period when the liquidation order under the IBC is expected of the court.

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