Tuesday, May 11, 2021
Home Business Corporate Affairs Ministry Mulling Setting of Threshold for Homebuyers for Starting Insolvency...

Corporate Affairs Ministry Mulling Setting of Threshold for Homebuyers for Starting Insolvency Proceedings

In the last three years 21,000 cases have come to IBC, out of which nearly 10,000 cases have been settled

In a move to limit the abuse of the Insolvency and Bankruptcy Code (IBC), the Corporate Affairs Ministry is mulling the setting of a threshold for homebuyers for starting insolvency proceedings against real estate developers, Corporate Affair Secretary Injeti Srinivas said on Monday.

Speaking to reporters, Srinivas said the ministry is also looking at a distribution formula for financial and operational creditors to create a hybrid system of auction of properties with a rigorous examination of resolution applicants to make the system more transparent and legal hassle free.

“If a single homebuyer is the (insolvency) trigger because the Rs one lakh threshold has crossed, one day default has crossed..otherwise a well-functioning company comes to NCLT (National Company Law Tribunal, it is not a happy situation,” he said.

“There is a feedback from housing and urban affairs ministry and other quarters like real estate industry that this has to be looked at, and some threshold approached has to be followed. In the last three years 21,000 cases have come to IBC, out of which nearly 10,000 cases have been settled. 8,500 cases prior to admission and about 1,500 cases resolved and over 1,500 cases are ongoing. The whole issue of system getting clogged.

Corporate, Ministry, Homebuyers
Speaking to reporters, Srinivas said the ministry is also looking at a distribution formula for financial and operational creditors to create a hybrid system of auction of properties with a rigorous examination. Pixabay

“These are real issues but the typical approach which will be beneficial is that cases that involve large outstanding and where IBC is the best option should actually take recourse to IBC. Things which are not having smaller outstanding can be better settled outside IBC. IBC is a rigorous process with lot of phases” ,” he added.

The Secretary was briefing reporters here following a meeting between Finance Minister Nirmala Sitharaman with bankers on IBC issues.

The meeting, at which he was present, also discussed the treatment of operational creditors under the IBC which has been a bone of contention.

Folks who intend to catch fun whilst making some cash can take advantage of reputable online casinos like this brand new casino. Here, you’ll have access to a good number of gaming options that’ll thrill you whilst facing an increased possibility of smiling to the bank afterward.

“The possibility of formula-based distribution (of assets) which is fairly elaborate which can give best option and reduce litigation and reduce time for litigation with (section) 29A getting settled beyond doubt, the only litigation area essentially is who gets how much, if that can be resolved in an effective manner that could be the real thing”, he said.

Also Read- 5G Needs To Happen Faster in India, Says Top Intel Executive

He also said the government is considering ways to to make the IBC process more transparent and less litigation prone

“Right now, there and both financial and non-financial considerations. The non-financial considerations determine the eligibility and the financial considerations determine the outcome of the bids. So, there is a feeling that the non-financial considerations can be use for shortlisting and then for the bidding we can have auction mode,” he said.

“There could be possibilities that we would examine to make it more transparent and less litigation prone, whether we can have a hybrid system where we can have the rigorous examination of resolution applicants’s eligibility in one stage and after we shortlist all eligibles can there be an auction platform where they actually bid..that can increase confidence in the system,” he added.

Billionaire L.N. Mittal-owned ArcelorMittal had last year won a long-drawn auction for Essar Steel but still has not been able to take over the company. While the NCLT approved ArcelorMittal’s bid in March, some operational creditors and British lender Standard Chartered have filed appeals in higher courts.

Corporate, Ministry, Homebuyers
If a single homebuyer is the (insolvency) trigger because the Rs one lakh threshold has crossed, one day default has crossed..otherwise a well-functioning company comes to NCLT (National Company Law Tribunal, it is not a happy situation. Pixabay

Essar Steel is saddled with debt of more than Rs 50,000 crore. As per ArcelorMittal’s proposal, financial creditors would receive Rs 41,987 crore against their admitted claims of Rs 49,395 crore. Operational creditors were to get Rs 214 crore initially but this was increased to Rs 1,214 crore later.

Also Read- Afghanistan Initiates Polio Drive, Targets 8.5mn Kids

Standard Chartered would get only Rs 60 crore against its claim of Rs 3,487 crore. Standard Chartered and the operational creditors have submitted that the financial creditors, that is banks such as State Bank of India and Edelweiss Asset Reconstruction Company, will receive almost 90-92 per cent of their dues. (IANS)

STAY CONNECTED

19,511FansLike
362FollowersFollow
1,773FollowersFollow

Most Popular

Is Taiwan’s Silicon Shield Enough To Protect It From Chinese Aggression?

The global shortage of semiconductors, or microchips — the “brains” in all electronic devices, has heightened the geopolitical significance of Taiwan and its chip-making...

Samsung Develops CXL-Based DRAM Memory Tech For Data Centres

Samsung Electronics said on Tuesday it has developed a new DRAM memory technology based on the Compute Express Link (CXL) interconnect standard that can...

The Right Way to Wield Influence: Influencer Masoom Minawala Mehta

"Presence on social media also commands a certain responsibility", says fashion influencer Masoom Minawala Mehta There is such a cloud around the term "influencers"; in...

Puducherry Becomes ‘Har Ghar Jal’ Union Territory

Puducherry has become a ‘Har Ghar Jal' Union Territory (UT) by ensuring that every rural home in the UT gets a household tap connection. With...

Bamboo Bats May Be The Future Of Cricket

The likes of Virat Kohli, Chris Gayle, and Kane Williamson could well discard their English willow bats for those made from bamboo. British scientists...

Achieving Success Doesn’t Erase Trauma: Chris Rock

Hollywood actor and comedian Chris Rock said he used his time during the Covid-19 induced lockdown to have lots of therapy to tackle issues...

Jeff Bezos Used To Review Products On Amazon; Check Them Out

Before Jeff Bezos became a multi-billionaire, he used to write product reviews for Amazon, and over a period of six years between 2000 and...

Battled Depression After Wrist Injury At 2008 Beijing Olympics: Sania Mirza

India's tennis ace Sania Mirza battled depression after she had to pull out of the 2008 Beijing Olympic Games due to a wrist injury....

Recent Comments