The prospect of a law being challenged in courts should not deter policy makers from taking appropriate decisions, India’s insolvency board chief MS Sahoo said, defending the recent amendments in the Insolvency and Bankruptcy Code.
“We cannot sacrifice the sole objective of the code just to enable a few people,” Sahoo told BloombergQuint in an interaction. “Even if there is a deficiency in the law then the court has a right to guide us,” he added.
His comments came after the government amended the IBC to bar defaulting promoters and nine other types of entities from bidding for non-performing assets. Experts including top corporate lawyer Cyril Shroff and governance advisory firm founder Anil Singhvi argued that the government may have gone too far by keeping promoters out of the bidding process. This would hurt recovery for lenders, they added.
If the objective of having “clean and credible” people run a business, results in a few people being left out, that isn’t a bad thing, Sahoo said.
The chairman of the Insolvency and Bankruptcy Board of India explained that the amendments are not a standard specified only for promoters but are applicable to everyone interested in submitting bids for the defaulting companies. “The objective is that people with clear antecedents come and take over the corporate which is being resolved,” he said. The people who take over must submit financially sound resolution plans and have the capability to translate it into action.
We can’t put it (defaulted assets) in the hands of a person who doesn’t have a track record of turning around assets.MS Sahoo, Chairman, Insolvency and Bankruptcy Board of India
Sahoo remained confident that the amendments would withstand challenges in courts.
Of the 12 cases referred to the IBC under direction by the Reserve Bank of India, none have reached a resolution within the 180-day timeline and the process may get extended by another 90 days as per procedure, he said.
Watch the full interview here.
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