IBC and SARFAESI Act confusion again as RBI takes up Aircel case

How two laws dealing with insolvent companies may work at cross-purpose at times

The differences between the Insolvency and Bankruptcy Code (IBC) and the SARFAESI Act, 2002, are apparent again after the Reserve Bank of India (RBI) reportedly rejected UV Asset Reconstruction Company’s (UVARCL) plan to buy the assets of Aircel, the distressed telecom company.

The RBI reportedly said UVARCL’s plan did not confirm with guidelines laid out for Asset Reconstruction Companies (ARCs) and the provisions of the SARFAESI Act. This puts a question mark on participation of ARCs in the bidding process for companies undergoing insolvency resolution. UVARCL has been approved by a committee of creditors to buy Reliance Telecom’s distressed assets,