'No combining assets for liquidator fee'

The liquidators of insolvent companies cannot combine proceeds from asset sales with the company's liquid assets to calculate their fees, which results in excessive remuneration, according to an order by the Insolvency and Bankruptcy Board of India (IBBI), the authority responsible for bankruptcy rules

- Gireesh Chandra Prasad

In its order on Thursday, the regulator clarified the fees must be calculated separately based on proceeds generated from asset sales and as a share of the liquid assets distributed to its stakeholders. Liquidators are eligible for a higher fee for selling a company's assets as per existing rules, but the regulator clarified the two components must not be merged.

The clarification follows instances of different interpretations by liquidators to compute their fees, leading to discrepancies among distressed companies and, in some cases, triggering investigations into their affairs.