IBC May Lead To Companies Being Sold In Bits And Pieces, Warns Chidambaram
“Most of these stressed assets will go into the control of foreign firms”, Chidambaram said.
The bill to amend the Insolvency and Bankruptcy Code may lead to companies being “sold in bits and pieces” as it practically excludes every resolution applicant, Senior Congress leader P Chidambaram told the Rajya Sabha today.
The ineligibility conditions that excludes a person from submitting a resolution plan, should be kept small, Chidambaram said during a debate on the recent amendments to the insolvency code that laid down 10 criteria which would make a person ineligible to submit a resolution plan for stressed assets.
“Most of these stressed assets will go into the control of foreign firms”, he said, adding that a level playing field should have been created for Indian investors to bid for stressed assets.
Amendments to the Insolvency and Bankruptcy Code, 2016, cleared by the President of India on Nov. 23, say that those whose accounts have been non-performing for a year will not be allowed to participate in the resolution plan. Those who have not have settled overdue amounts on the said accounts will also not be permitted, said another provision within the amendments.
Chidambaram said, the repercussions of such an amendment would end up in “stressed companies being sold in bits and pieces, and that's the worst possible result”.
He further questioned the rationale behind referring so many companies for the insolvency proceedings in one go, pointing out that India may not have enough qualified resolution professionals to handle this volume of insolvency cases.