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Buyers of insolvent firms with stressed arms may get to bid for other companies

Wednesday, January 31, 2018, 18:53
This news item was posted in Business category and has 0 Comments so far.

NEW DELHI: The government is considering amending the Insolvency and Bankruptcy Code (IBC) to allow a person who acquires an insolvent asset that has a subsidiary with a non-performing loan to be eligible for bidding for other insolvent assets.Under Section 29A of the Insolvency and Bankruptcy Code promoters of any defaulting company are ineligible to be a resolution applicant.The amendment will ensure that anyone acquiring an insolvent asset does not become ineligible under the law to offer a resolution plan for another asset.Responding to a query on whether the government plans to dilute Section 29A, M Sahoo, chairperson of Insolvency and Bankruptcy Board of India said on Wednesday, “I would not be able to comment on that… The insolvency law committee is taking up the industry recommendations… The issue of group entities is in the consideration of the committee.” The government has allowed ineligible promoters to submit a resolution plan if they clear the dues before submitting a resolution plan. The committee of creditors will allow a period of 30 days to the resolution applicant to make the payment of overdue amounts to become eligible.On the issue of more companies getting into liquidation than resolving insolvency, Sahoo said, “It is not surprising. It is a legacy issue and in the initial days there will be many companies going into liquidation.” Addressing a conference on the new disclosure regime for insolvency professionals Sahoo said that all loopholes in the law cannot be plugged at once. “We are learning by experience,” he said. A year since Insolvency and Bankruptcy Code was introduced, the government is still in the process of fine-tuning resolution procedures.A 14-member IBC law committee, chaired by corporate affairs secretary Injeti Srinivas, has been formed to identify issues that may impact efficiency of corporate insolvency resolution.

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