'Focus on resolution, not liquidation in insolvency proceedings'
Kolkata: Insolvency and Bankruptcy Board of India's (IBBI) Chairperson M.S. Sahoo on Saturday said the focus is on getting resolution in the corporate insolvency resolution process though liquidation is happening more in the initial stages.
"Resolution plan is not just a bidding mechanism or price discovery mechanism...our focus would be on resolution. The objective is to keep the firm alive, to maximise the value of the asset and balance the interests of all stakeholders. It is definitely not the liquidation," he said.
Liquidation is happening in the initial stage and there is no need to worry to much, Sahoo said at an event organised by CII here.
"So far, about 850 corporate debtors have been admitted into the resolution process. About 130 have completed the first stage of the process and the rest are in the path. Out of 130, about 100 have ended up in the liquidation," he added.
Many initiatives have been taken to promote resolution over liquidation in the corporate insolvency resolution process, Sahoo added.
Speaking on the latest Ordinance promulgated on June 6, the IBBI chief said with a view to encouraging resolution as opposed to liquidation, the voting threshold has been brought down to 66 per cent from 75 per cent for all major decisions such as approval of resolution plan, extension of CIRP (Corporate Insolvency Resolution Process) period, etc.
Further, in order to facilitate the corporate debtor to continue as a ongoing concern during the CIRP, the voting threshold for routine decisions has been reduced to 51 per cent.
In order to protect the sanctity of the CIRP, the Ordinance lays down a strict procedure if an applicant wants to withdraw a case after its admission under IBC 2016.
Referring to an official statement he said it highlighted some of the specific issues that would be addressed including non-entertainment of late bids, no negotiation with the late bidders and a well laid down procedure for maximising value of assets.
"All this will come in the regulation. These issues are being dealt. The regulation will come shortly," Sahoo said.