Resolution, distribution

may be separated in IBC

RUCHIKA CHITRAVANSHI
New Delhi, 1 December STATUS CHECK Total IBC
cases 31,203
As on December 1
The government is considering an Cases pending
amendment to the Insolvency and 22,443 (post-admission)
Bankruptcy Code (IBC) to separate the
process of resolution of a bankrupt
Cases disposed 7,175
firm from the distribution of Cases pending
funds received from the successful (pre-admission) 3,369
bidder to enable a faster takeover of
the distressed company, a senior Note: NCLT is working to reconcile minor discrepancies Source: NCLT
government official told
Business Standard.
“In many cases the suc-
cessful bidder is unable to 54% CIRPs
take over the company Appealed/ (till Sep
because of disputes regard- withdrawn/ 2022)
ing the distribution of funds.
Right now the whole plan goes
settled/
resolved
46%
Liquidated
as one but it is being suggested
Note: CIRP: Corporate insolvency resolution process Source: IBBI
that we look at it in two parts,” the
official said.
The corporate affairs ministry is ernment should also get something out India (IBBI) and Reserve Bank of India,
rethinking the lower priority currently of the resolution process, which is not resolution professionals (RPs), bankers
given to government dues in the IBC happening now. We are looking into it,” and judges of the National Company
under the waterfall mechanism. The the official added. Law Tribunal. The amendment Bill is
IBC places secured lenders at the top of The amendments needed to the IBC likely to be placed before Parliament
the waterfall mechanism, followed by were discussed in a meeting of a collo- next year in the Budget Session. Some
employees and operational creditors. quium earlier this week. The meeting of the changes, however, may be made
Fourth come government dues. was attended by officials of the through alterations in rules as well.
“There is a suggestion that the gov- Insolvency and Bankruptcy Board of Turn to Page 6 >
 by retaining the service of the
> FROM PAGE 1 RP beyond the approval of the
resolution plan.
Resolution, “The RP and the commit-
tee of creditors can decide the
details of distribution as a sub-
distribution sequent activity after the res-
olution plan has been
may be approved,” the official said.
Industry experts say while
separated in handover to the successful
bidder has not been delayed,
IBC litigation by creditors can lead
to problems for the winning
The separation of resolution bidder. “Some creditors, in
and distribution will be done order to get a bigger share, can
> all options available to credi-
BS SUDOKU # 3834
arm-twist the bidder to give
more money. For example,
they can get an injunction on
the corporate insolvency
process, which would derail
the plan,” said Anshul Jain,
partner, PwC India.
The data released by the
IBBI shows financial creditors
have recovered 32.95 per cent
of their claims in 553 corporate
insolvency processes that were
resolved till September this
year. The IBBI said this only
reflected the extent of value
erosion by the time the debtor
entered the resolution process.
“Yet it is the highest among
tors for recovery. Resolution
plans on average are yielding
84 per cent of the fair value of
the corporate debtors,” the
IBBI said.