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The ongoing issue involving Supreme Infrastructure India Limited (<keyword id="23294280" type="General" weightage="20" keywordseo="SIIL" source="keywords">SIIL</keyword>) and the State Bank of India (<keyword id="19898108" type="General" weightage="100" keywordseo="SBI" source="keywords">SBI</keyword>) has become a focal point in India’s financial and political landscape. It concerns SIIL’s default on significant loans and SBI’s decision to convert this debt into equity, raising concerns about the precedent it may set for future debt resolutions in India. <h2>SIIL's financial troubles</h2>SIIL, a construction and infrastructure company, was once engaged in large-scale projects such as roads and bridges across India. Over the years, however, the company faced severe financial troubles due to project delays and insufficient revenues. As SIIL’s cash flow problems worsened, it struggled to repay its loans, leading to the company’s default. The State Bank of India (SBI), being SIIL’s largest lender, found itself at the centre of this financial turmoil, as SIIL declared bankruptcy. In response, SBI decided to take an unusual step to recover its dues. <h2>SBI's debt-to-equity conversion decision</h2>In a surprising move, SBI converted its outstanding debt into equity in SIIL. This means that instead of pursuing traditional recovery methods or selling off assets, SBI has now become an equity stakeholder in SIIL, shifting from being its primary lender to part-owner. The controversial decision also involved other lenders who agreed to take a 93.45% “haircut” on the debt, which indicates that they are recovering only a fraction of the original loans extended to SIIL. <h2>Criticism and concerns</h2>The decision has drawn sharp criticism, particularly from political circles. <keyword id="19895371" type="General" weightage="20" keywordseo="Congress" source="keywords" meta.keywordsubtype="org" meta.entityname="Congress" meta.hostid="261" meta.entityid="Congress">Congress</keyword> leader Jairam Ramesh, through a post on the social media platform X (formerly Twitter), criticised SBI’s approach and raised several concerns. He highlighted that SBI’s decision to become an equity stakeholder in a company that declared bankruptcy could set a "dangerous precedent in India’s <keyword id="20575563" type="General" weightage="20" keywordseo="corporate-debt" source="keywords">corporate debt</keyword> landscape". "This arrangement creates a dangerous precedent in India's corporate debt landscape — it encourages other defaulting companies to seek similar deals, where they can retain control and value even after significant defaults," Ramesh noted. <div type="Article" hostid="261" msid="112987756" title="Congress alleges SEBI Chairperson Madhabi Puri Buch of office for profit" mstype="2" mssubtype="0"></div>His concerns extend to how this move might affect the <keyword id="20158086" type="General" weightage="20" keywordseo="Insolvency-and-Bankruptcy-Code" source="keywords">Insolvency and Bankruptcy Code</keyword> (IBC) and India’s overall framework for handling distressed companies. By converting <keyword id="22921090" type="General" weightage="20" keywordseo="debt-to-equity" source="keywords">debt to equity</keyword>, SBI could be seen as aligning itself with the interests of the defaulting borrower (SIIL) rather than prioritising the recovery of public funds, which are at stake in cases involving <keyword id="19959986" type="General" weightage="20" keywordseo="public-sector-banks" source="keywords">public sector banks</keyword> like SBI. “The SBI appears to be aligning itself with the interests of the defaulting borrower (SIIL) rather than prioritising the recovery of public funds,” Ramesh further argued. "The Reserve Bank of India (RBI) needs to step in and examine SBI's decision-making process in this matter." Given the unusual nature of this debt restructuring and the potential risks it introduces, Congress is urging the Reserve Bank of India (RBI) to step in and examine SBI’s decision-making process. Ramesh emphasised the need for regulatory scrutiny to ensure that public sector banks maintain discipline in their approach to resolving bad loans. Congress' position is that SBI’s move could create a moral hazard within India’s <keyword id="19964544" type="General" weightage="20" keywordseo="banking-sector" source="keywords">banking sector</keyword>, encouraging more companies to default on their loans with the hope of retaining control through similar debt-to-equity swaps. Ramesh pointed out that the entire situation raises questions about how distressed assets should be managed by public sector banks, and whether SBI’s actions are truly in the best interests of the public. <div type="Article" hostid="261" msid="113620397" title="SEBI report reveals the ugly truth of F&amp;amp;O trading in India – 93% of retail traders incurred losses" mstype="2" mssubtype="0"></div>"There is a pressing need to ensure that public sector banks maintain strict discipline in their approach to debt resolution and avoid creating moral hazards in the financial system." <h2>Broader implications</h2>This situation shines a light on broader challenges in India’s banking and insolvency frameworks. When public sector banks like SBI take significant financial losses (haircuts) and switch from creditors to shareholders, it risks undermining confidence in the banking sector’s ability to handle bad loans effectively. Moreover, it raises questions about the long-term sustainability of the Insolvency and Bankruptcy Code (IBC) if companies that default can avoid paying back substantial portions of their debt and still retain operational control. (With inputs from PTI)

Congress criticises SBI's decision to convert SIIL debt into equity, urges RBI intervention

The government is expected to propose amendments to the competition law after taking into consideration various suggestions of a Parliamentary panel, in the upcoming <keyword id="105431" type="General" weightage="100" keywordseo="Budget-session" source="Orion">Budget session</keyword> of <keyword id="6354721" type="General" weightage="80" keywordseo="parliament" source="Orion">Parliament</keyword>, according to a senior official. Besides, discussions are going on with respect to amendments to the <keyword id="6354456" type="General" weightage="50" keywordseo="insolvency-and-bankruptcy-code" source="Orion">Insolvency and Bankruptcy Code</keyword> (<keyword id="192838" type="General" weightage="50" keywordseo="ibc" source="Orion">IBC</keyword>) as well as the Companies Act, 2013. The official also said that the corporate affairs ministry is examining a Parliamentary panel's suggestions for having a new digital competition law. The ministry is implementing the Competition Act, IBC and the Companies Act, and amendments to these laws are expected this year. A bill to amend the competition law was introduced in Parliament on August 5 last year and was later referred to the <keyword id="403206" type="General" weightage="50" keywordseo="parliamentary-standing-committee-on-finance" source="Orion">Parliamentary Standing Committee on Finance</keyword>. The panel tabled its report on December 13 last year and the ministry will now be coming up with an amendment bill after taking into consideration various recommendations of the committee. The senior official said the bill to amend the competition law is expected in the <keyword id="6358021" type="General" weightage="70" keywordseo="budget" source="Orion">Budget</keyword> session of Parliament. The introduction of a 'Settlement and Commitment framework to reduce litigations' and incentivising parties in an ongoing cartel investigation in terms of lesser penalty to disclose information regarding other cartels were among the proposals in the bill that was introduced in August last year. In its report, the Parliamentary panel recommended various changes to the bill to amend the competition law, including bringing cartels under the scope of settlements as a "pragmatic recourse". The Budget session of Parliament will commence on January 31 with President <keyword id="2848422" type="General" weightage="50" keywordseo="droupadi-murmu" source="Orion">Droupadi Murmu</keyword>'s address to the joint sitting of <keyword id="6355187" type="General" weightage="50" keywordseo="lok-sabha" source="Orion">Lok Sabha</keyword> and <keyword id="48510" type="General" weightage="50" keywordseo="rajya-sabha" source="Orion">Rajya Sabha</keyword>. The session will have 27 sittings and will continue till April 6 with a month-long recess to examine the budget papers. The first part of the session will conclude on February 14 and after a break, reconvene on March 12. In another report on 'Anti-Competitive Practices by Big Tech Companies', the Parliamentary panel, on December 22, proposed a new digital competition law, ex-ante regulations and the creation of a category of systemically important digital intermediaries to curb anti-competitive practices in the digital market. SEE ALSO: <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/budget/news/i-belong-to-middle-class-understand-their-pressures-sitharaman-before-budget/articleshow/97031282.cms">I belong to middle class, understand their pressures: Sitharaman before Budget</a> <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/finance/news/over-5-4-lakh-housing-units-to-be-completed-across-top-7-cities-in-2023-anarock-report/articleshow/97029912.cms">Over 5.4 lakh housing units to be completed across top 7 cities in 2023: Anarock report</a>

Amendments to competition law likely in Budget session

Byju's Founder <keyword id="1702989" type="General" weightage="100" keywordseo="Byju-Raveendran" source="Orion">Byju Raveendran</keyword>'s plea against the insolvency of <keyword id="19901241" type="General" weightage="20" keywordseo="Think-Learn" source="keywords">Think &amp; Learn</keyword> before the NCLAT was adjourned on Monday, as one of the members of the bench recused from the hearing. The matter will be placed before a bench headed by <keyword id="19916403" type="General" weightage="20" keywordseo="National-Company-Law-Appellate-Tribunal" source="keywords" meta.keywordsubtype="org" meta.entityname="National Company Law Appellate Tribunal" meta.hostid="345" meta.entityid="National Company Law Appellate Tribunal">National Company Law Appellate Tribunal</keyword> (NCLAT) Chairman Justice Ashok Bhushan, who will assign a different bench to hear the matter. Raveendran had filed a petition challenging the initiation of <keyword id="19965539" type="General" weightage="20" keywordseo="insolvency-proceedings" source="keywords">insolvency proceedings</keyword> against Think &amp; Learn, which runs edtech company Byju's. The matter was listed on Monday before a two-member Chennai-based bench of the NCLAT comprising Justice Sharad Kumar Sharma, Member (Judicial), and Jatindranath Swain, Member (Technical). However, Justice Sharma recused himself from the hearing, saying he had appeared as the counsel for the Board of Control for Cricket in India (<keyword id="19901245" type="General" weightage="20" keywordseo="BCCI" source="keywords" meta.keywordsubtype="org" meta.entityname="BCCI" meta.hostid="345" meta.entityid="BCCI">BCCI</keyword>) before his elevation. "I have appeared as a senior counsel for (the) BCCI. Since they are the main beneficiaries of this order, I cannot take this up," said Sharma. The Bengaluru bench of the National Company Law Tribunal (<keyword id="19901085" type="General" weightage="20" keywordseo="NCLT" source="keywords">NCLT</keyword>) on July 16 directed Corporate Insolvency Resolution Proceedings (CIRP), admitting the plea filed by the BCCI. The BCCI had approached the NCLT under the Insolvency and Bankruptcy Code (IBC) over a default of Rs 158.9 crore by Think &amp; Learn -- once India's most valuable startup worth an estimated $22 billion. NCLT has suspended the board of Think &amp; Learn Pvt Ltd as per the provisions of the IBC and had appointed an interim resolution professional (IRP) to take care of the debt-ridden firm. Raveendran challenged the NCLT order before the appellate tribunal NCLAT. He has also approached the Karnataka High Court. The high court had, on July 26 deferred Raveendran's plea to July 30. At the high court, Raveendran challenged the validity of the order and suspension of the NCLT order till the NCLAT hears the appeal.

NCLAT judge recuses from hearing Raveendran's plea against insolvency proceedings of Byju

The <keyword id="6354457" type="General" weightage="50" keywordseo="national-company-law-tribunal" source="Orion">National Company Law Tribunal</keyword> has approved a ₹1,814 crore resolution plan for the private hill station <keyword id="136664" type="General" weightage="80" keywordseo="lavasa" source="Orion">Lavasa</keyword>, nearly five years after the initiation of the <keyword id="128499" type="General" weightage="80" keywordseo="insolvency" source="Orion">insolvency</keyword> resolution process. <keyword id="12809273" type="General" weightage="50" keywordseo="darwin-platform-infrastructure-ltd" source="Orion">Darwin Platform Infrastructure Ltd</keyword> (DPIL) has emerged as the winning bidder for <keyword id="201476" type="General" weightage="50" keywordseo="lavasa-corporation-ltd" source="Orion">Lavasa Corporation Ltd</keyword>, which is primarily into the business of the development of the private hill station by the same name in Pune. In a 25-page order passed on Friday, the tribunal cleared the resolution plan at an investment of ₹1,814 crore. The amount includes a "resolution plan amount of ₹1,466.50 crore to be paid/ discharged from funds infused over multiple tranches into the corporate debtor by way of cash funding and instruments, being equity, Project inflows, loans, advances or a combination thereof," the order said. The corporate debtor is Lavasa. A monitoring committee comprising the insolvency professional (earlier resolution professional), one representative each from financial creditors and <keyword id="12585854" type="General" weightage="100" keywordseo="darwin-platform" source="Orion">Darwin Platform</keyword> will supervise the implementation of the resolution plan. "The resolution plan meets the necessary statutory requirements under the Code as well as the regulations, we hereby approve the same," the <keyword id="6355809" type="General" weightage="80" keywordseo="nclt" source="Orion">NCLT</keyword> said. The petition for the insolvency resolution process under the Insolvency and Bankruptcy Code (<keyword id="192838" type="General" weightage="50" keywordseo="ibc" source="Orion">IBC</keyword>) was initiated in August 2018. Set up in 2010 and a part of the <keyword id="7634213" type="General" weightage="50" keywordseo="darwin-platform-group" source="Orion">Darwin Platform Group</keyword>, promoted by <keyword id="14721127" type="General" weightage="50" keywordseo="ajay-harinath" source="Orion">Ajay Harinath</keyword> Singh, DPIL is engaged in infrastructure contracts and services and caters to various segments like infrastructure, refineries, retail and hospitality, among others. "The NCLT has entrusted us with a challenging task to develop an ambitious world-class smart city in the country. The verdict would reinforce our commitment to nation-building. Lavasa is now on the cusp of a remarkable resurgence. DPIL is committed to executing the plan as per the schedule proposed to the CoC. We are very eager to revitalise this ambitious project," Singh said in a statement. Giving assurance to homebuyers, he said, "The plight of homebuyers, along with the concerns of secured financial creditors, would not go unnoticed by DPIL. The company promises to include the stakeholders in the revival process and prioritise their needs". SEE ALSO:<a href="https://www.businessinsider.in/business/auto/news/cars-and-suv-with-sunroof-under-10-lakh-in-india/slidelist/102017132.cms" target="_blank"></a> <a href="https://www.businessinsider.in/business/auto/news/cars-and-suv-with-sunroof-under-10-lakh-in-india/slidelist/102017132.cms" target="_blank">Tata Altroz becomes cheapest car with a sunroof – Cars under ₹10 lakh with this feature</a><a href="https://www.businessinsider.in/tech/mobile/news/oppo-reno-10-vs-oneplus-nord-3-mid-range-smartphones-compared-price-specs-and-more/slidelist/102005130.cms" target="_blank"></a> <a href="https://www.businessinsider.in/tech/mobile/news/oppo-reno-10-vs-oneplus-nord-3-mid-range-smartphones-compared-price-specs-and-more/slidelist/102005130.cms" target="_blank">Oppo Reno 10 vs OnePlus Nord 3 - The camera vs processor clash in the mid-range segment</a> <a href="https://www.businessinsider.in/business/news/netflix-india-ends-password-sharing-outside-households/articleshow/101976844.cms">Netflix India ends password sharing outside households – Here’s how it will work</a>

NCLT approves ₹1,814 crore resolution plan for Lavasa: Darwin Platform winning bidder

The <keyword id="6354457" type="General" weightage="20" keywordseo="National-Company-Law-Tribunal" source="Orion">National Company Law Tribunal</keyword> (<keyword id="6355809" type="General" weightage="20" keywordseo="NCLT" source="Orion">NCLT</keyword>) on Thursday reserved its order on crisis-hit <keyword id="34984" type="General" weightage="20" keywordseo="airline" source="Orion">airline</keyword> <keyword id="11252024" type="General" weightage="20" keywordseo="Go-First" source="Orion">Go First</keyword>'s plea seeking voluntary insolvency resolution proceedings. A two-member bench headed by President Justice Ramalingam Sudhakar concluded the day-long hearing during which the Wadia group-controlled airline sought initiation of insolvency resolution proceedings and an interim moratorium on its financial obligations. However, aircraft lessors opposed the airline's request saying that insolvency proceedings cannot be initiated without hearing them. Senior Advocate Neeraj Kishan Kaul, representing Go First, said the objective of the Insolvency and Bankruptcy Code (<keyword id="192838" type="General" weightage="20" keywordseo="IBC" source="Orion">IBC</keyword>) is to ensure that a company is a going concern and not ground it. Cash-strapped Go First has cancelled flights till May 9. SEE ALSO: <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/business/auto/news/ola-electric-ather-to-refund-charger-cost-to-e-scooter-buyers/articleshow/99988313.cms">Ola Electric, Ather to refund charger cost to e-scooter buyers</a> <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/tech/news/amazon-sale-available-on-kindle-echo-speakers-and-fire-tv-sticks/articleshow/99987706.cms">Amazon Summer Sale 2023: Big discounts on Kindle, Echo speakers and Fire TV Stick</a>

NCLT reserves order on Go First's plea for insolvency resolution proceedings

<keyword id="19895282" type="General" weightage="20" keywordseo="mumbai" source="keywords">Mumbai</keyword>, <keyword id="19922074" type="General" weightage="20" keywordseo="reserve-bank" source="keywords">Reserve Bank</keyword> Governor <keyword id="19913110" type="General" weightage="20" keywordseo="shaktikanta-das" source="keywords">Shaktikanta Das</keyword> on Monday said the endeavour of the central bank would be to provide a stable and strong financial system over the next decade, which will act as the bedrock for the country's economic progress. Over the years, the <keyword id="19899810" type="General" weightage="20" keywordseo="reserve-bank-of-india" source="keywords">Reserve Bank of India</keyword> (<keyword id="19899808" type="General" weightage="20" keywordseo="rbi" source="keywords">RBI</keyword>) has emerged as a symbol of stability, resilience and commitment to the welfare of our citizens, he said at an event to mark the 90th anniversary of the RBI. "As we move towards RBI at 100, the Reserve Bank remains focussed on a stable and strong financial system that would act as the bedrock for our country's economic progress," he said. The Reserve Bank is constantly evaluating the emerging trends and taking necessary policy measures to remain in sync with the changing times, he said, adding the central bank's effort is to anticipate situations and take proactive measures. Das highlighted that the Reserve Bank's evolution as an institution has been closely intertwined with the development of the Indian economy. "We are a full-service central bank with our functions spanning multiple dimensions. It has been our endeavour to promote a financial sector that is robust, resilient, and future-ready," he said. Talking about structural reforms, he said, the enactment of the <keyword id="19901118" type="General" weightage="20" keywordseo="insolvency" source="keywords">Insolvency</keyword> and Bankruptcy Code and the adoption of flexible inflation targeting in recent years, have helped to deal with the challenges in the banking system and the task of maintaining price stability more effectively.

Stable, strong financial system to act as bedrock for economic progress: RBI Governor

New Delhi, The government is preparing to amend the <keyword id="128499" type="General" weightage="100" keywordseo="insolvency" source="Orion">insolvency</keyword> law as it looks to reduce the time taken for completion of resolution process of stressed assets and prevent significant erosion of value of the assets, according to a senior official. Amendments to the Insolvency and Bankruptcy Code (<keyword id="192838" type="General" weightage="80" keywordseo="ibc" source="Orion">IBC</keyword>), which came into force in 2016 for timely resolution of stressed assets, are likely to be introduced in the <keyword id="6358021" type="General" weightage="50" keywordseo="budget" source="Orion">Budget</keyword> session of <keyword id="6354721" type="General" weightage="50" keywordseo="parliament" source="Orion">Parliament</keyword> early next year. The corporate affairs ministry's move to amend the law also comes against the backdrop of concerns in various quarters that many of the corporate insolvency resolution processes are taking a longer time due to litigations and other issues despite a stipulated time frame in place. The senior government official told PTI that consultations are going on with various stakeholders, including bankers and lawyers, and the changes are expected to be finalised in the coming weeks. The focus is on how to speed up the whole resolution process by reducing the time taken. One of the options being looked at is how fast a company undergoing the resolution process can be handed over to the winning bidder as that would help in preserving the value of the assets concerned, the official said. As per IBC, a company's affairs are taken care of by an insolvency resolution professional till the winning bidder takes over. To ensure that there is no significant value erosion, the amendments will look at putting in place provisions whereby the assets can be handed over to the winning bidder at the earliest, the official said. On the basis of data from the Insolvency and Bankruptcy Board of India (IBBI) till the end of September this year, the ministry informed the <keyword id="6355187" type="General" weightage="50" keywordseo="lok-sabha" source="Orion">Lok Sabha</keyword> on December 12 that a total of 553 cases have been resolved under IBC and the average time taken for the resolution was 473 days. In the current fiscal up to September, 57 cases were resolved under IBC and the average time taken was 679 days. The higher time taken for resolution is mainly on account of associated litigation as with time, the average number of interlocutory applications has increased, which is considered to impact realisable value of assets, the ministry told the Lower House. As per the data, it took an average of 560 days to resolve 143 cases in 2021-22, while the average time taken was 468 days to resolve 120 cases in 2020-21. In 2017-18, 19 cases were resolved and the average time taken was 230 days, and in 2018-19, 78 cases were resolved at an average time of 326 days. In 2020-21, as many as 120 cases were resolved and the average time taken was 468 days. The IBC time frame for the resolution process is 330 days, inclusive of time taken for litigation. As per the IBBI data, the 517 cases that yielded resolution plans took an average of 460 days for conclusion till the end of June while the recovery rate for creditors against the claims made was around 31 per cent. SEE ALSO: <a href="https://www.businessinsider.in/thelife/personalities/news/i-am-glad-i-fd-up-so-much-in-life-that-it-is-content-now-says-ankur-warikoo/articleshow/96282722.cms">I am glad I F**%*D up so much in life that it is content now says Ankur Warikoo</a> <a href="https://www.businessinsider.in/careers/news/tech-layoffs-surpass-great-recession-levels-set-to-get-worse-in-early-2023/articleshow/96314678.cms">Tech layoffs surpass Great Recession levels, set to get worse in early 2023</a>

Govt to amend insolvency law to reduce time taken for resolution process

With the debt recoverable rate going down to 30.8 per cent or Rs 243,452.5 crore (lenders foregoing Rs 70 per cent of their admitted claims of Rs 790,626.2 crore) the number of cases admitted for Corporate <keyword id="128499" type="General" weightage="100" keywordseo="insolvency" source="Orion">Insolvency</keyword> Resolution Process (CIRPs) has increased since the launch of the Insolvency and Bankruptcy Code in 2016, said <keyword id="6431877" type="General" weightage="80" keywordseo="care-ratings" source="Orion">CARE Ratings</keyword>. The report also said the trend in the loan recovery rate is also going down. In a research report, CARE Ratings said after slowing in H2FY21 and FY22, the number of insolvency cases increased by 24 per cent y-o-y in Q2FY23. "However, despite the increase, the number of cases admitted to the insolvency process continued to be lower compared to earlier quarters in FY19/20. The distribution of cases across sectors has remained broadly similar, compared to earlier periods," CARE Ratings said. According to the report, the overall recovery rate till Q2FY23 was 30.8 per cent implying a haircut of approximately 70 per cent. "However, the cumulative recovery rate has been on a downtrend, decreasing from 43 per cent in Q1FY20 and 32.9 per cent in Q4FY22 as larger resolutions have already been executed and a significant number of liquidated cases were either <keyword id="155128" type="General" weightage="50" keywordseo="bifr" source="Orion">BIFR</keyword> (<keyword id="149218" type="General" weightage="50" keywordseo="board-for-industrial-and-financial-reconstruction" source="Orion">Board for Industrial and Financial Reconstruction</keyword>) cases and/or defunct with high-resolution time," the CARE Ratings report notes. The number of cases admitted for Corporate Insolvency Resolution Process (CIRPs) has increased each quarter since the launch of the Insolvency and Bankruptcy Code (<keyword id="192838" type="General" weightage="50" keywordseo="ibc" source="Orion">IBC</keyword>) in 2016., highlighting the rising acceptance of IBC as an effective debt resolution mechanism. The admission of cases has increased y-o-y in Q2FY23 by around 24 per cent after reducing in the last few quarters in FY21 and FY22, however, despite the increase, the number of cases admitted to the insolvency process continues to be lower compared to earlier quarters in FY19/20. According to CARE Ratings, the IBC has continued to gain in popularity, with close to 6,000 companies being admitted and a significant number of these cases on a cumulative basis being filed by the financial creditors (2,531 cases) and the operational creditors (3,008 cases). As of September 2022, the share of financial creditors has decreased, while that of operational creditors has increased. The share of corporate debtors has continued to remain the smallest over the same period. The share of the various sectors has largely remained constant compared with the previous period. The manufacturing sector accounts for the highest share at 39 per cent of the overall cases, followed by the real estate (21 per cent), construction (11 per cent) and trading sectors (10 per cent), the credit rating agency said. As regards the status of the cases under the Corporate Insolvency Resolution Process (CIRP), it remained constant compared with the previous period. Out of 5,889 cases admitted into CIRP at the end of 30.9.2022, only 9 per cent have ended in approval of resolution plans, while 33 per cent remain in the resolution process versus 35 per cent as of the end of March 2022, the report said. A total of 1,807 have ended in liquidation (31 per cent of the total cases admitted). Meanwhile, 76 per cent of such cases were either BIFR cases and/or defunct. "Around 14 per cent (846 CIRPs) have been closed on appeal /review /settled, while 11 per cent have been withdrawn under Section 12A. A significant number of withdrawn cases (around 54 per cent) were less than Rs 1 crore, while the primary reason for withdrawal has been either the full settlement with the applicant (40.6 per cent) or other settlement with creditors (24 per cent)," CARE Ratings said. SEE ALSO: <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/business/corporates/news/icici-bank-launches-digital-lending-solution-ilens-powered-by-tcs/articleshow/95849140.cms">ICICI Bank launches digital lending solution iLens, powered by TCS</a> <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/finance/news/rupee-gains-8-paise-to-81-60-against-us-dollar/articleshow/95850197.cms">Rupee gains 8 paise to 81.60 against US dollar</a>

Financial creditors forego Rs 790.626 cr under insolvency resolution process: CARE Ratings

<ul><li>The government is looking to increase the accountability of promoters towards their defaulted loans. </li><li>To this effect, the government could amend its bankruptcy law which will allow banks to invoke personal guarantees given by promoters for loans to their companies. </li><li>An appellate court had earlier disallowed such a move, in a case involving the Ruias and their bankrupt Essar Steel. </li></ul> India’s Finance Ministry is sitting on a new amendment to the bankruptcy law. That might be a big setback for the Ruia family, the promoters for the bankrupt Essar Steel, and others who gave personal guarantees against bank loans. As per the current resolution process, lenders can recover a certain portion of the dues from the bankrupt company. The proposed amendment targets personal guarantors to corporate debt. Once amended, the law will allow lenders to recover some ‘more money’ from such guarantors, according to sources who added that the Finance Ministry’s approval is likely in the next few days. A recent ruling by the National Company Law Appellate Tribunal (NCLAT) had disallowed a similar appeal by Essar Steel’s lenders. “Once the debt payable by the ‘Corporate Debtor’ stands cleared in view of the approval of the plan by making payment in favour of the lenders (‘Financial Creditors’), the effect of ‘Deed of Guarantee’ comes to an end as the debt stands paid,” the NCLAT order had said. ”The ‘financial creditors’ in whose favour guarantee were executed as their total claim stands satisfied to the extent of the guarantee, they cannot reagitate such claim from the Principal Borrower,” it added. But the government is intent on ensuring that banks get as much money back as they can, even if it is from the promoter’s personal assets. “If the government is proposing amendments in this space by way of amendment in the IBC (Insolvency and Bankruptcy Code) and if that is so, it would need a parliament approval. We will have to wait and see the nature of amendments to be sure whether parliamentary approval is needed or not. Secondly, I am sure that promoters of various corporate debtors will test any such amendment in a court of law,” said Kunal Tandon, a lawyer who has represented banks in bankruptcy cases. "The matter is subjudice and recovery amounts haven’t yet been crystallised. Hence it is premature to comment," an Essar Group spokesperson told Business Insider. This will be the second change to the bankruptcy law in the last three months In July, the NCLAT approved ArcelorMittal’s ₹42,000-crore ($6 billion) offer for Essar Steel. However, the NCLAT also held that financial creditors (banks) at par with operational creditors (unpaid suppliers, vendors etc). This would have reduced the banks’ share of proceeds from the sale amount. But the government argued that the ruling was against the spirit of the bankruptcy law and process. So it brought in an amendment soon after that allowed the banks to decide how the proceeds of the resolution will be distributed. SEE ALSO: <a href="https://www.businessinsider.in/nclat-clears-arcelormittal-bid-for-bankrupt-essar-steel/articleshow/70071681.cms" data-type="tilCustomLink" target="_blank">ArcelorMittal's bid for the bankrupt Essar Steel clears another hurdle that will give banks 60% off their dues-- butthe appellate order has done something more</a> <a href="https://www.businessinsider.in/a-slowing-indian-economy-is-clouding-over-arcelormittals-6-billion-bid-for-essar-steel/articleshow/71004519.cms" data-type="tilCustomLink" target="_blank">A slowing Indian economy is clouding over ArcelorMittal's $6 billion bid for Essar Steel</a>

EXCLUSIVE: New amendment to bankruptcy law has Prashant Ruia’s personal guarantee on its radar

6 troubling questions about the Corizon bankruptcy deal

<ul><li>The government is changing the <keyword id="6354456" type="DEFINITION" weightage="20" keywordseo="Insolvency-and-Bankruptcy-Code">Insolvency and Bankruptcy Code</keyword> (<keyword id="192838" type="ORGANIZATION" weightage="20" keywordseo="IBC">IBC</keyword>) to prevent <keyword id="129055" type="ORGANIZATION" weightage="20" keywordseo="Bidders">bidders</keyword> from backing out for superficial reasons after submitting a winning bid. </li><li>The move is a response to a spate of withdrawals by successful bidders, most recently seen the case of <keyword id="6441397" type="ORGANIZATION" weightage="20" keywordseo="liberty-house">Liberty House</keyword> reneging on its commitment to buy Amtek Auto. </li><li>The amendment will likely require the winning bidder to deposit a percentage of the bid amount with the government after the bidding process is over. </li></ul>It might seem surprising that India’s <a href="https://indianexpress.com/article/business/centre-plans-changes-in-ibc-law-to-prevent-frivolous-bids-5602255/">latest change</a> to its bankruptcy code is aimed at ensuring the winning bidder for an insolvent company or its assets actually honours its bid. But given the spate of withdrawals by successful bidders, most recently seen the case of Liberty House <a href="https://www.business-standard.com/article/companies/london-based-liberty-house-fails-to-make-the-payment-for-amtek-auto-118112300023_1.html">reneging on its commitment to buy Amtek Auto</a>, the government is finally changing the <keyword id="128499" type="COMPANY" weightage="20" keywordseo="insolvency">Insolvency</keyword> and Bankruptcy Code (IBC) to prevent bidders from backing out for superficial reasons after submitting a winning bid, according to Corporate Affairs Secretary Injeti Srinivas. A new policy involving a “security deposit” of sorts will likely be implemented. This will require the winning bidder to deposit a percentage of the bid amount with the government right after the bidding process has been completed. In the event that the winning bidder withdraws its bid, it will have to forfeit its security deposit. Furthermore, investors that renege on their bids could also be “blacklisted,” which means that they won’t be able to take part in future auctions of indebted companies, or have criminal proceedings initiated against them, <a href="https://www.business-standard.com/article/economy-policy/insolvency-bankruptcy-code-govt-looking-at-ways-to-avoid-frivolous-bids-119022600336_1.html">according to media reports</a>. The move is an attempt to make the resolution process under the IBC more effective. <a href="https://www.financialexpress.com/economy/two-years-of-ibc-near-52-pct-of-cases-end-in-liquidation/1455272/">Nearly 900 cases </a>were still pending under the bankruptcy regime as of December 2018, a third of which had gone on longer than the maximum resolution period of 9 months. This isn’t the first time the government has changed the code and it won’t be the last. In August last year, the Parliament voted <a href="https://www.livemint.com/Companies/nPD1k2LS7JM9Z2CkNzLk4L/Bankruptcy-code-amendments-offer-some-hope-to-troubled-home.html">to give homeowners a say </a>in the resolution proceedings of property developers and construction companies. More importantly, in November 2017, the government barred promoters <a href="https://qz.com/india/1137178/india-updates-bankruptcy-code-ibc-amended-to-keep-wilful-defaulters-and-errant-promoters-from-bidding-for-auctioned-assets/">from bidding for their own firms</a>. Critics of the IBC have also <a href="https://www.businessinsider.in/indias-finance-minister-touts-the-success-of-the-countrys-recently-implemented-bankruptcy-code-but-it-still-requires-significant-improvement/articleshow/67382165.cms">cited conflict of interest</a> arising from giving the committee of creditors (CoC) the final say over resolution plans. As opposed to the actual owners or shareholders of a company, the creditors’ motivations mainly concern the recovery of their claims, even if it means the liquidation of a business that could be viable following the infusion of capital. But companies also are required to pledge their assets or collateral at the time of taking out a bank loan in case of a default. SEE ALSO: <a href="https://www.businessinsider.in/indias-finance-minister-touts-the-success-of-the-countrys-recently-implemented-bankruptcy-code-but-it-still-requires-significant-improvement/articleshow/67382165.cms">India’s finance minister touts the success of the country’s recently-implemented bankruptcy code — but it still requires significant improvement</a> <a href="https://www.businessinsider.in/india-badly-needs-bankruptcy-experts-and-this-course-could-be-your-ticket-to-a-hot-new-career/articleshow/67553029.cms">India badly needs bankruptcy experts</a>

India is tweaking its bankruptcy law to prevent successful bidders from backing out

<ul><li>The Indian government is launching an academic course — the Graduate Insolvency Program — to train a crop of new insolvency professionals. </li><li>India’s stressed bank assets rose to $146 billion recently. </li><li>The 27-month program is likely to benefit insolvency professionals. It will help them handle tough bankruptcy cases within a short time.</li></ul>India has a huge, emerging sector for helping distressed and bankrupt companies come out of financial difficulty. But it faces a huge shortage of bankruptcy professionals who can oversee the process. To make up for the lack, the Indian government is reportedly launching a fresh academic course — <a href="https://economictimes.indiatimes.com/markets/stocks/news/want-to-graduate-in-insolvency-heres-how-you-can/articleshow/67534863.cms">Graduate Insolvency Program</a> — which will help train a new crop of insolvency professionals. The Insolvency and Bankruptcy Board of India (IBBI) will likely launch the program in first week of February. It will allow fresh candidates to take up Insolvency profession while presently hirings happen from the lot having at least 10-15 years of experience. The 27- month program aims to train nearly 45 such professionals annually. India introduced a new bankruptcy law, the <keyword id="6354456" type="DEFINITION" weightage="20" keywordseo="Insolvency-and-Bankruptcy-Code">Insolvency and Bankruptcy Code</keyword> (<keyword id="192838" type="ORGANIZATION" weightage="20" keywordseo="IBC">IBC</keyword>), two years ago — which was seen as a landmark law to help several banks resolve a huge pile of bad debt from under-performing or stressed companies. The new rules gave recourse to both the company’s promoters and creditors. How will the course benefit insolvency professionals? As of 2017, the country had nearly <a href="https://economictimes.indiatimes.com/jobs/jobs-how-will-graduates-gain-from-insolvency/articleshow/59850758.cms">600-700 insolvency professionals</a>, according to Mamta Binani, former president of Institute of Company Secretaries of India. While according to a senior official from ICAI, certified training programs have the capacity to create thousands of job opportunities. That is because, India’s National Company Law Tribunals have been flooded with hundreds of such cases that will need insolvency professionals for primary operations. Who will be eligible? The graduate insolvency program will be outsourced from prominent Indian institutions, and operate in sync with regulators. It will admit candidates from varied backgrounds from chartered accountants, post graduates in economics, finance, management, commerce, cost accountants, company secretaries and law graduates. However, there will be a minimum bar to qualify the elimination exam, just as for the Common Admission Test (CAT). Foreign nationals will also be eligible to take up the course — along with a reservation quota of five seats. The Indian government hopes the course will be added help for professionals already working on bankruptcy to solve the cases more efficiently. It will also give the professionals domestic and international exposure in the field through internships. The overall cost for the graduate program is yet to be declared. However, it is <a href="https://www.businesstoday.in/current/economy-politics/alert-for-cas-law-students-check-out-new-graduation-course-on-bad-loans/story/310221.html">expected to cost </a>between ₹700,000 to ₹1,000,000. India has tried to groom insolvency professionals earlier as well. Last year, the Ministry of Skill Development &amp; Entrepreneurship (MSDE) and Insolvency and Bankruptcy Board of India (IBBI) jointly announced a training program for <a href="http://www.uniindia.com/news/business-economy/msde-launches-insolvency-associate-course-in-du/1285995.html">‘Insolvency Associates’</a> to create more jobs in the sector. Rolled out under the Pradhan Mantri Kushal Vikas Yojana (PMKVY), the 250-hour course focused on insolvency issues including Companies Act, accounting and valuation. See also: <a href="https://www.businessinsider.in/next-global-recession-may-be-just-two-years-awayand-india-should-be-worried/articleshow/67535452.cms">Next global recession may be just two years away—and India should be worried</a> <a href="https://www.businessinsider.in/india-witnessed-its-highest-unemployment-rate-in-27-months-at-7-38-in-december-says-cmie/articleshow/67418218.cms">India witnessed its highest unemployment rate in 27 months at 7.38% in December, says CMIE</a> <a href="https://www.businessinsider.in/big-data-and-analytics-may-be-the-hottest-sector-but-india-has-a-serious-dearth-of-data-scientists/articleshow/66860305.cms">Big data and analytics may be the hottest sector, but India has a serious dearth of data scientists</a>

India badly needs bankruptcy experts — and this course could be your ticket to a hot, new career

<ul><li>The cumulative recovery rate has been on a downtrend, decreasing from 43% in Q1FY20 and 32.9% in Q4FY22. </li><li>The number of cases admitted for insolvency resolution has increased y-o-y in Q3FY23 by around 25%. </li><li>Of the total 6,199 cases admitted into CIRP at the end of December 2022, only 10% have ended in approval of resolution plans. </li></ul>The overall recovery rate in <keyword id="5289100" type="General" weightage="20" keywordseo="insolvency-cases" source="Orion">insolvency cases</keyword> till Q3FY23 was 30.4% implying that lenders took a haircut of approximately 70%, according to a report by CareEdge, a credit rating company. The cumulative recovery rate has been on a downtrend, decreasing from 43% in Q1FY20 and 32.9% in Q4FY22 as larger resolutions have already been executed. A significant number of liquidated cases were either Board for Industrial and Financial Reconstruction (BIFR) cases and/or defunct with high resolution time, coupled with lower recoverable values. The number of cases admitted for Corporate Insolvency Resolution Process (CIRPs) has increased y-o-y in Q3FY23 by around 25% after reducing in the last few quarters in FY21 and FY22 which saw a slowdown due to the pandemic. Despite the increase, the number of cases admitted to the insolvency process continues to be lower compared to earlier quarters in FY19/20. The number of cases admitted for CIRPs has increased each quarter since the launch of the Insolvency and Bankruptcy Code in 2016, highlighting the rising acceptance of IBC as an effective debt resolution mechanism. IBC has continued to gain in popularity, with close to 6,200 companies being admitted and a significant number of these cases on a cumulative basis till December 2022 being filed by the financial creditors (2,692 cases) and the operational creditors (3,133 cases). The share of corporate debtors has continued to remain the smallest over the same period. Of the 2,000 ongoing CIRPs, there has been a delay of more than 270 days for the completion of the process of 64% of ongoing CIRPs in December 2022 which is a decline of 9% as compared to 73% in December 2021. Further, the report observes that the ‘more than 180 days but less than 270 days’ segment is the second largest indicating that quite a few cases which had commenced in the earlier quarters have piled up, while the other two categories continue to have quite a few cases in them highlighting the significant delays in the process.

You Searched For "ibc insolvency and bankruptcy code" and got 13 results

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Financial creditors forego Rs 790.626 cr under insolvency resolution process: CARE Ratings

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EXCLUSIVE: New amendment to bankruptcy law has Prashant Ruia’s personal guarantee on its radar

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6 troubling questions about the Corizon bankruptcy deal

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India is tweaking its bankruptcy law to prevent successful bidders from backing out

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India badly needs bankruptcy experts — and this course could be your ticket to a hot, new career

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