Waning Interest in Stressed Assets

INSOLVENCY proceedings against the 12 big companies are the first test of the effectiveness of the Insolvency and Bankruptcy Code (IBC) in handling non- performing assets or NPAs. The expectation was that the comprehensive resolution framework would make large companies bid for stressed assets and, in turn, help banks reduce NPAs. The initial, almost electric, enthusiasm, however, seems to have fizzled out and only a few companies have turned in final bids or even resolution plans. The largest NPA, Essar Steel, for instance, only mustered two bids – one from the world’s largest steelmaker ArcelorMittal; the second is an attempt by the promoter Ruia family to get back the company. Most others, including the Bhushan companies, Monnet Ispat and Electrosteel Steels, are in the same boat. The only exception is Jaypee Infratech for which 20 big companies have apparently submitted bids.