The governments new and improved rules for insolvency resolution are not good enough and will pave the way for huge political embarrassment for the government. Neither the original rules nor the new ones preclude original promoters who ran their companies into bankruptcy repossessing their assets on the cheap, shorn of debt. This is a bad idea. The rules must, without ambiguity, bar promoters who presided over their companies descending into bankruptcy, or their associates, from bidding for the company being sold either as a going concern or as parts after liquidation.
The amended rules make it incumbent on the resolution professional to do due diligence of the applicants, who could include original promoters. The idea ostensibly is to …
Read the full article at: https://blogs.economictimes.indiatimes.com/et-editorials/keep-promoter-off-liquidated-assets-otherwise-bankruptcy-politics-will-turn-toxic/