IBBI allows part sale of assets during CIRP

IBBI allows part sale of assets during CIRP

The Insolvency and Bankruptcy Board of India in a significant move has proposed to allow the sale of part assets and businesses in the Corporate Insolvency Resolution Process (CIRP).

However, the aforesaid proposition can only be undertaken in the event the revolution plan is not received within the stipulated timeline.

This change has been proposed in line with practices in foreign jurisdictions to reduce delays in the resolution process and improve the resolution value.

The IBBI has expressed these changes in its paper on information utility, for which public comments have been sought.

It is believed that if these changes are implemented participation in the CIRP process would increase significantly to thereby include such prospective applicants who are not interested in the entire business but parts of it.

Ruby Singh Ahuja, Senior Partner - Karanjawala & Co, a law firm, said "this mode of partial sale of assets will help creditors recover at least part of dues otherwise under the scheme, as it exists, the corporate debtor will go into liquidation in case no plan is received under the prescribed timelines. Partial resolution of the corporate debtor is certainly preferred as compared to liquidating as far as recovery of dues is concerned"

Currently, the sale of part assets is allowed only during the liquidation process, not in the CIRP.