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Resolution, distribution may be separated in IBC
Business Standard
|December 02, 2022
The government is considering an amendment to the Insolvency and Bankruptcy Code (IBC) to separate the process of resolution of a bankrupt firm from the distribution of funds received from the successful bidder to enable a faster takeover of the distressed company, a senior government official told Business Standard.
"In many cases the successful bidder is unable to take over the company because of disputes regarding the distribution of funds. Right now the whole plan goes as one but it is being suggested that we look at it in two parts," the official said.
The corporate affairs ministry is rethinking the lower priority currently given to government dues in the IBC under the waterfall mechanism. The IBC places secured lenders at the top of the waterfall mechanism, followed by employees and operational creditors. Fourth come government dues.
"There is a suggestion that the government should also get something out of the resolution process, which is not happening now. We are looking into it," the official added.
This story is from the December 02, 2022 edition of Business Standard.
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