Insolvency Resolution: IBBI to Oversee Complaints Against CoC

If the Insolvency and Bankruptcy Board of India (IBBI) finds evidence of criminal irregularities, it will approach the special courts, set up under the provisions of the Companies Act, 2013, to punish the guilty, the Financial Express reported. Amid clamour for a greater scrutiny of the conduct of lenders, the IBBI is set to oversee complaints against members of the committee of creditors (CoC) if they fail to comply with a proposed code of conduct while resolving toxic assets. Upon receiving complaints of noncompliance of its code, to be notified soon, the insolvency regulator will probe allegations of wrongdoing against financial creditors who are part of the powerful CoC that decides on key issues. If the IBBI finds evidence of criminal irregularities, it will approach the special courts, set up under the provisions of the Companies Act of 2013, to punish the guilty, said the sources. The mechanism will ensure the CoC members abide by the rules and the stressed asset resolution process remains transparent. The need for such a professional code assumed significance after a few cases tested the spirit of the Insolvency and Bankruptcy Code (IBC) in recent months. In the case of Siva Industries Holding, the lenders accepted a one-time settlement by its former promoter, who had offered just 6.5% of the total debt, and filed a withdrawal application before the NCLT. In the case of Videocon, the NCLT had highlighted that the lenders were taking an almost 96% haircut and exclaimed that Twin Star Technologies’ offer was very close to the stressed firm’s liquidation value, which was meant to be confidential. The IBBI, which proposed the code of conduct for the CoC in a discussion paper last month, has received stakeholders’ comments. Read more.

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