'Stringent measures to scrutinize promoters bidding for stressed assets'
Mumbai: Eminent Legal & Domain Experts participating in a seminar on 'Challenges and emerging avenues under Insolvency and Bankruptcy Act 2016' organised by NW study circle of Insolvency professionals highlighted the need for urgent measures to developing challenge of bidding by promoters to stressed assets in the insolvency proceedings and to develop the time-bound processes to comply with 180 deadlines provided in Insolvency & Bankruptcy Code.
Recently Essar Steel & Bhushan Steel has undergone Insolvency process and news of their promoters bidding for stressed assets has generated a controversy in media fearing exploitation of Insolvency proceedings.
The bankruptcy of the corporate debtors may be due to the genuine business losses or misappropriation or fraud played by the corporate. In case of siphoning the funds, the act of the corporate debtors would be to exploit the Insolvency process by getting the haircut of the liabilities or bidding for the stressed assets.
"The imperative need is to bridge this gap so that the dubious or fraudulent promoters may not exploit the gap playing further scam with various stake holders such as financial institution, revenue departments or public. Such an outcome would seriously hamper the effort of the government to revitalise the economy or improve the financial discipline in the country.
"The conducting of the forensic audit of the corporate debtor is essential to rule out the possibility of any fraud perpetrated by the promoters. In case of no fraud, the genuine promoters may be allowed to proceed for insolvency proceedings or bidding for stressed assets and in situation of fraud/siphoning, the promoters may be charged and misappropriated funds be recovered " said Neeraj Aarora, an Independent Director of the IPA of ICAI and Advocate, Supreme Court of India.