New Delhi, March 8, 2018
The 75 pct threshold is likely to be brought down to 65-66 pct.
To minimise the possibility of a deadlock or delay in decision making in the insolvency resolution process, the government is contemplating reduction in the share of votes required for approving a resolution plan by the committee of creditors, sources aware of the development told FE.
As per Section 30(4) of the Insolvency and Bankruptcy Code, 2016, the committee of creditors (CoC) may approve a resolution plan by a vote of not less than 75% of voting shares of financial creditors. Sources quoted above said the 75% threshold is likely to be brought down to 65-66%. “This has been a long-standing demand, and it will help us to reach a decision faster. Now even if fewer banks agree on a plan, there is scope for it to be accepted as the final plan,” a banker said on condition of anonymity.
In addition to smaller accounts, a clutch of the top 12 accounts that were first referred to the National Company Law Tribunal (NCLT) have received bids from resolution applicants, which are at present being evaluated by the resolution professional (RP) and the CoCs. “The easing of the 75% voting requirement will make it easier for the CoC to go ahead with a plan even if there is a difference of opinion among bankers,” another source with direct knowledge of the development said.
The government is also likely to allow promoters of micro, small and medium enterprises (MSMEs) to bid for their assets. Some of these amendments are likely to be announced over the next one week, sources said. This could not be independently verified or confirmed by FE.
Bankers have been wary that MSMEs admitted by the NCLT may not attract interest from other investors, and would have to face liquidation if promoters are not allowed to bid for their companies.
Bankers and other stakeholders have regularly been sending their suggestions to the IBBI regarding the IBC. Recently, the government, through the Insolvency and Bankruptcy Code (Amendment) Bill, 2017 barred promoters of accounts that have been classified as non-performing assets for at least a year from submitting resolution plans.
The ordinance on this issue was issued in November 2017. However, the amendment provides for promoters to make payments of the overdue amount and participate in the resolution process. Promoters have been given 30 days to make payments.
[The Financial Express]