The Insolvency and Bankruptcy Code (IBC) should gradually evolve to its full potential and one of its main objective is to maximise the value of assets of corporate borrowers, IBBI chairman M S Sahoo said today.
The Insolvency and Bankruptcy Board of India (IBBI) chief also said that the capability of Committee of Creditors is absolutely critical for success of IBC, though the role of insolvency professionals is also important.
IBBI was set up last year to regulate the functioning of insolvency professionals and other related entities under the Insolvency and Bankruptcy Code, 2016.
The Code, notified by the government in May last year, has consolidated and amended laws relating to reorganisation as well as insolvency resolution of corporate persons, partnership firms and individuals in a time-bound manner.
Under this new law, employees, creditors and shareholders have been given powers to initiate winding up process at the first sign of financial stress such as serious default in repayment of bank loans.
Sahoo, who was addressing a seminar on IBC organised by PHD Chamber of Commerce and Industry here, described laws relating to IBC as the most progressive among all laws effected and enacted post economic liberalisation.
The two important things in this new law are "that you must maximise the value of the assets of the corporate debtor... and resolution has to happen (and) that has to balance the interests of stakeholders," he said.
Sahoo said the Committee of Creditors would take a call on all commercial matters relating to liquidation and emphasised that the IBBI is generally of the view that the value of enterprise should be always higher as compared to the worth of liquidation.
According to a release issued by the chamber, Sahoo said the domestic judiciary has been quiet supportive in dispensing matters that arose on issues relating to IBC and hoped that the Indian IBC would evolve gradually to its potential.
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