Bankrupt firms can be sold in parts, says IBBI

IBBI said in a statement that the idea is to maximise value in resolution. The amendments to regulations on ‘Insolvency Resolution Process for Corporate Persons’ issued last Friday enables the resolution professional and the committee of creditors to issue request for resolution plan a second time for sale of one or more of assets of the corporate debtor in cases where no resolution plan has been received for the corporate debtor as a whole.

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

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

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

It also enables a longer time for the asset to be in the market as the invitation for expression of interest been advanced to 60th day from insolvency commencement date. Changes have also been introduced to provide more relevant information to persons for expressing interest, IBBI said.

With the aim to reduce delays in the process and to enhance efficiency of available time, the amendment enables creditors to examine whether they want to explore the option of ‘compromise or arrangement’—a restructure option under the Companies Act–and seek the same from the tribunal while applying for a liquidation order.

If creditors decide to explore ‘compromise or arrangement’–the option outside the Insolvency and Bankruptcy Code (IBC)–then they should explore that option during the period the order for liquidation under IBC is awaited from the tribunal.

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