The threat of invoking IBC is itself enough to prevent defaults and to reinstate the sanctity of debt contract.ByK Srinivasa Rao
The judgment of the Supreme Court upholding the legal sanctity of Insolvency and Bankruptcy Code (IBC) can bring a tectonic shift in the loan repayment culture. It asserts that the defaulters cannot bid for the assets of the insolvent company in terms of amended section 29 (A) to regain control while lenders are forced to take a haircut. It also tames the attitude of Committee of Creditors (CoC) and provides a clear and firm guidance that its decisions cannot be arbitrary, as was seen in the recent stance in the Essar Steel case. It asserts that CoC is not the ultimate link in the value-chain of IBC. It also re…
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