The Committee of Creditors (CoC) of a non-performing asset (NPA or bad loan) account must provide all relevant information and share its vision for the company under resolution with the prospective resolution applicants in order to come up with a rescue plan, the insolvency regualtor has said.
"CoC must provide the resolution applicants all relevant information like a promoter does while making an IPO (initial public offer). In such a case a prospectus is issued, roadshows are organised and promoters share their vision so that people believe in him and subscribe to the issue," the Insolvency and Bankruptcy Board of India (IBBI) Chairperson M.S. Sahoo told IANS in an interview.
"Similarly, the CoCs have to share its vision for the company under resolution so that RAs (resolution applicants) show interest and come up with a plan if they find the option viable."
The IBBI Chairperson said that this is also important to prevent companies from going into liquidation as this should only be the last option when all other efforts fail.
"I will insist on rescue of a viable company", he said.
CoC is the group of financial creditors who take the call on the resolution plan.
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The regulator said that the CoC must create a favourable impression about the underlying value of the indebted firm, and encourage submission of appropriate resolution plans for reorganisation of the firm by the resolution applicants.
Sahoo is of the view that the commercial decisions which a CoC is required to take in a Corporate Insolvency Resolution Process (CIRP) resolution plan is towards reorganising the firm as a going concern so as to maximise the value of its assets.
The regulator had recently opined that if an NPA firm is viable, then the CoC must visualise the resolution plan required for its reorganisation.
A resolution plan may entail various measures ranging from a change of management, technology or product portfolio to the acquisition or disposal of assets, businesses or undertakings and the restructuring of ownership, balance sheets or organisation, among others.
(Anjana Das can be contatcted at anjana.d@ians.in)
--IANS
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