Right time for investing in Indian stressed assets: IBBI Chairperson

IBBI Chairperson says distressed assets in India is vast and will increase in days

The chairperson of Insolvency and Bankruptcy Board of India (IBBI) Dr M.S. Sahoo has stated that the market for distressed assets in India is vast and will increase in days to come and there cannot be a better time than the present one for making investments in these.

Speaking at the FICCI-IBBI-HCI Singapore Conference on IBC (Insolvency and Bankruptcy Code), Dr Sahoo said, "The stressed assets market will increase as the Indian economy, which is huge, is likely to grow more than 7% over the next two decades, with simultaneous increase in innovation, competition, credit market and credit growth."

 

He further added, "Given the future potential of the Indian economy, it is a great opportunity as far as investors are concerned and, therefore, those seriously thinking about investment in India, there cannot be a better time than the present one when distressed assets are available through the Code (IBC)."

On the issue of haircut, Dr Sahoo said that the criticism about haircut is unfounded as it still provides a bonus when compared to the liquidation value of the firm and that it has been seen to decline over time in every other jurisdiction.

Dr Sahoo highlighted that there has been significant improvement in the credit behaviour of the corporates as repayment of debt is no longer an option but an obligation. The fear of CIRP (insolvency resolution) permanently taking away the control and management of the firm from existing promoters deters them from committing a default.

The Conference was organized as part of the Roadshow on 'Insolvency and Bankruptcy Code of India - New Paradigm for Stressed Assets' in Singapore (6th -7th June 2019).

The Roadshow also includes meetings with focused groups of potential investors and professional firms. These meetings offer an opportunity to understand the details of the insolvency reforms and investment options and opportunities in stressed assets in India with the policy makers, regulators, leading law and consulting firms, and financial intermediaries.

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