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Banks to negotiate only with top bidder in insolvency cases

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Banks to negotiate only with top bidder in insolvency cases 
Bankers have decided that they will negotiate only with the highest bidder when resolving cases of corporate insolvency. 
The decision was taken at a meeting held by the Indian Banks' Association on Monday following consultations with the Insolvency and Bankruptcy Board of India and resolution professionals. The Insolvency and Bankruptcy Code (IBC) hasn't laid out any rules on this matter. 
Conventionally, the creditors negotiate with the top few bidders to get the best value for the insolvent company. 
"Since the IBC code did not specify that negotiations can be held with only the highest bidder, clarity was required given that in some cases resolution professionals and lenders entered into talks with multiple players," said a senior official aware of the developments. 
Banks, however, will now follow the guidelines prescribed by the Central Vigilance .. 
"This is expected to streamline the process. We also expect that serious players will up their bid, which ultimately helps in fetching a better price for the asset," said a senior bank executive. It will also speed up the resolution process. However, industry experts said deciding the highest bidder may not be simple. 
"No single plan can be determined as H1. One might pay a small amount upfront and give higher return overall or vice versa... Credentials of the bidder are also imp .. 
The Economic Times, New Delhi, 31st January 2018

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