The Insolvency and Bankruptcy Board of India (IBBI) has released a discussion paper that seeks to improve the value of stressed assets and reduce delays in insolvency processes. The regulator has charted out certain activities under the insolvency process that can be done simultaneously as opposed to one after another. The paper said that for prospective buyers of stressed assets, the information memorandum (IM) is not required to pique their interest in the assets. IM contains specific information about insolvent firms. Preparing this document takes a lot of time, so in the initial stages, only basic information about such firms can be provided to interested buyers to save time.
The paper also talks about increasing the period for submitting the Information Memorandum as the regulator has observed that this process takes more time.
It has also been proposed to decrease the time for filing avoidance applications so that potential buyers can have complete information about the assets of insolvent firms. Avoidance Applications widen the asset pool of lenders by bringing back the assets unlawfully diverted from insolvent firms.
The paper proposed that resolution professionals (RP) shall prepare a strategy for marketing stressed assets where the total claims exceed Rs 100 crore. The creditors can also propose measures to market such assets. This proposal is designed to increase competition in the marketplace and enhance the value of these assets.
Comments on the paper may be submitted electronically by 17th July, 2022.
Click here for the discussion paper
