IBBI Allows Bankrupt Companies To Be Split, Boost For Recovery Of Due

Regulatory agency Insolvency & Bankruptcy Board of India (IBBI) has allowed splitting of companies to attract more participants into the corporate resolution process as it seeks to provide flexibility and increase realisation, the Economic Times of India reported. The move to split assets is seen to be beneficial in cases involving real estate players and other entities with multiple projects, all of which may not be viable, or there may be some assets which will generate higher value, a senior government official said. It would help in the resolution of bankrupt conglomerates into multiple businesses. “To maximise value, the amendment enables the resolution professional (RP) and the committee of creditors (CoC) to issue a request for a resolution plan a second time for the sale of one or more of assets of the corporate debtor (CD) in cases where no plan has been received for the corporate debtor as a whole. It enables for a plan to includethe sale of one or more assets of CD to one or more successful resolution applicants submitting plans for such assets and providing for appropriate treatment of the remaining assets,” IBBI said while releasing the amended regulations. The new rules also provide a last-ditch compromise settlement with the promoter before liquidation if everything else fails. Read more.