Even as creditors are going ahead with the insolvency proceedings initiated against 12 companies under the new Insolvency and Bankruptcy Code (IBC), the latter are raising concerns on the procedures for appointment of Interim Resolution Professionals (IRPs).
It appears some of the companies have approached the Securities and Exchange Board of India and other authorities for clarity on whether the current securities law, especially on insider trading and the takeover code, would apply.
“Some contentions have been raised over the insolvency proceedings.
We are studying the feedback received,” said a regulatory official.
Under the IBC, if a borrower is unable to pay the debt inagiven time,acreditor can initiate insolvency resolution proceedings.
Either a creditor or debtor company has to file an application, with proof of default, to the National Company Law Tribunal for initiating the process of resolution.
The IRP, within seven days of taking charge, will appoint a registered valuer to determine the liquidation value of the debtor.
This would be computed in line with internationally accepted valuation standards, after physical verification of inventory and fixed assets.
“The entire exercise requires a great amount of credibility.
IRPs should ensure they do not compromise the values of the company.
Besides, they should be equipped enough to handle the complexities,” said a company official, requesting anonymity.
That apart, there are other concerns.
“The internal advisory committee panel takes control of the company and supersedes its board of directors.
The committee will also engage IRPs who will advise creditors on how to restructure.
This committee will have all the rights to examine and inspect price sensitive information.
This would impose certain obligation on board members, bound to give information in the circumstances,” said Siddharth Shah, partner, Khaitan & Co.
The Business Standard, New Delhi, 02nd August 2017
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