Stringent Measures Including Forensic Audit To Scrutnize Promoters Bidding For Stressed Assests, Eminent Legal & Domain Experts participated in a seminar on challenges and emerging avenues
Eminent Legal & Domain Experts participated in a seminar on ‘Challenges and emerging avenues under Insolvency and Bankruptcy Act 2016’ organised by NW study circle of Insolvency professionals highlighted the need for urgent measures to developing challenge of bidding by promoters to stressed assets in the insolvency proceedings and to develop the time-bound processes to comply with 180 deadlines provided in Insolvency & Bankruptcy Code.
Recently Essar Steel & Bhushan Steel has undergone Insolvency process and news of their promoters bidding for stressed assets has generated a controversy in media fearing exploitation of Insolvency proceedings. The bankruptcy of the corporate debtors may be due to the genuine business losses or misappropriation or fraud played by the corporate. In case of siphoning the funds, the act of the corporate debtors would be to exploit the Insolvency process by getting the haircut of the liabilities or bidding for the stressed assets.
“The imperative need is to bridge this gap so that the dubious or fraudulent promoters may not exploit the gap playing further scam with various stake holders such as financial institution, revenue departments or public. Such an outcome would seriously hamper the effort of the government to revitalise the economy or improve the financial discipline in the country. The conducting of the forensic audit of the corporate debtor is essential to rule out the possibility of any fraud perpetrated by the promoters. In case of no fraud, the genuine promoters may be allowed to proceed for insolvency proceedings or bidding for stressed assets and in situation of fraud/siphoning, the promoters may be charged and misappropriated funds be recovered ” said Mr. Neeraj Aarora, an Independent Director of the IPA of Institute of Cost Accountant of India and Advocate, Supreme Court of India.
Speaking in the conference, Dr. Mukulita Vijaywargiya, Whole Time Member,Insolvency and Bankruptcy Board of India (IBBI) stated that Insolvency & Bankruptcy code is the most dynamic Law in the country which is being amended expeditiously to meet the interest of stake holder and objective underlying the act. She further added that the act has been amended mandating stringent scrutiny to check antecedents of the bidders, including their credit worthiness along with the resolution plan submitted by Resolution Professional.
“The code has brought a revolutionary change where all creditors are at equality in getting their claims, however, the timelines under the code are tough and it is a challenge to complete the proceeding within the deadline of 180 days. The hostile attitude of the promoters is biggest obstacles which causes delay in proceedings and there is need to start foundational course to train the Insolvency Professional in handling these issues” spoke Mr. Sunil Pant, CEO, Indian Institute of Insolvency Professionals of ICAI (IIIPI).
The others who spoke during the seminar included Advocate Madhusudan Sharma & CA Anil Kohli, the Eminent Insolvency Professionals & Speakers. The conference “Recent Judgments on key issues and challenges faced by Insolvency Professionals under IBC 2016” was organised by NW Delhi Study Circle of Insolvency Professionals at Indian Law Institute, Supreme Court of India.