Insolvency: New norms to thwart surrogate bids

More disclosure may deter foreign buyers: Experts

- MANU KAUSHIK

INA MOVE that will stymie the attempts of promoters to use the insolvency process to pare their debt burden and take control of the assets again, the Insolvency and Bankruptcy Board of India(IBBI) has proposed a more elaborate disclosure regime for bidders. According to a discussion paper floated by the IBBI, prospective buyers of an insolvent company under the corporate insolvency resolution process (CIRP)will be required to disclose beneficial ownerswhile applying forthe takeover.

The move is in the wake of widespread belief that a sizeable number/quantum of assets that came under insolvency resolution has gone back tothe hands of delinquent promoters, who used proxies and complex corporate structures to conceal their identities.