IBC Seeks Max­i­miza­tion of Value of Stressed Com­pany

FICCI Business Digest - - Contents -

FICCI or­ga­nized a con­fer­ence on 'IBC-Ef­fec­tive Res­o­lu­tion of Stressed As­sets' on 25 May 2018 in Mum­bai. Rashesh Shah, Pres­i­dent, FICCI, hailed that the gov­ern­ment and In­sol­vency and Bank­ruptcy Board of In­dia (IBBI) for show­ing con­sid­er­able and pos­i­tive alacrity in terms of con­stant in­ter­ac­tion with the stake­hold­ers to bring about a strong, com­pre­hen­sive and ro­bust piece of leg­is­la­tion, which re­sponds to dy­nam­ics of the sit­u­a­tion.

MS Sahoo, Chair­man, IBBI, on the oc­ca­sion, urged, 'The Com­mit­tee of Cred­i­tors needs to eval­u­ate the op­tions re­al­is­ti­cally to cre­ate sus­tain­able value and not just dis­cover a price.'

While the con­fer­ence pro­vided a platform for in­ter­ac­tion to sev­eral stake­hold­ers of IBC (In­sol­vency and Bank­ruptcy Code) ecosys­tem, it fo­cused on the key is­sues faced by the cred­i­tors and res­o­lu­tion ap­pli­cants and crit­i­cally ex­am­ined the ro­bust­ness of IBC.

One of the sig­nif­i­cant take­aways from the con­fer­ence was recog­ni­tion of IBC as a leg­is­la­tion, which seeks re­vival of the com­pa­nies than their liq­ui­da­tion as the com­pa­nies with right man­age­ment and en­trepreneur­ship skill would be able to turn them around for the col­lec­tive ben­e­fit of its stake­hold­ers.

It was ob­served that re­cent cases un­der the IBC ev­i­dences that the op­er­a­tional cred­i­tors have as­sumed cer­tain rights and their con­cerns are be­ing re­solved on pri­or­ity by the di­rec­tors to avoid in­sol­vency pro­ceed­ings, and such a pos­i­tive step re­flects change in the cor­po­rate cul­ture.

The pan­elists con­cluded that there was a need for prag­matic de­ci­sion mak­ing to achieve a re­al­is­tic en­ter­prise value and have trans­par­ent pro­cesses for dis­cov­ery of value of the en­ter­prise. Also, it was urged that leg­is­la­tion must pro­vide eq­ui­table rights so that in­ter­ests of the stake­hold­ers are har­mo­nized in let­ter and spirit. It was heart­en­ing to wit­ness the ea­ger­ness of the cap­i­tal providers who were keen to par­tic­i­pate in res­o­lu­tion process and sought greater trans­parency in the in­for­ma­tion ma­trix which could suf­fi­ciently dis­close busi­ness and other risks, rel­e­vant for de­ci­sion mak­ing.

The key take­aways from the con­fer­ence have been sub­mit­ted to IBBI and FICCI is in con­stant di­a­logue with the IBC ecosys­tem par­tic­i­pants to ensure that a free, trans­par­ent, process-ori­ented and ef­fec­tive IBC ecosys­tem is pro­vided such that the in­dus­try is able to ben­e­fit from the land­mark leg­is­la­tion.

MS Sahoo, Chair­man, In­sol­vency and Bank­ruptcy Board of In­dia.

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