Bankruptcy

Axe on promoters of bankrupt companies

Axe on promoters of bankrupt companies Experts say promoters found to have misused banks' funds should be barred from the process altogether. A recent amendment to the Insolvency and Bankruptcy Code (IBC) has barred promoters of companies undergoing the resolution process from bidding for their own companies when they are auctioned as part of bankruptcy proceedings. Even sister concerns and corporate guarantors will also not be eligible to bid for these companies. Experts say the changes are expected to help streamline the process of selecting buyers for stressed assets. Essentially, the objective is that a more deserving resolution applicant should get a better chance to own and manage stressed assets going forward. Existing promoters found to have misused the banks' funds should be barred from the process altogether, says Ashish Chhawchharia, Partner - Restructuring Services, Grant Thornton Advisory Private Limited. This will lead to better chances of revival of the firm and higher returns to stakeholders.

This article appeared in Mail Today on 27th November, 2017.