Insolvency cases: Banks to negotiate only with the highest bidder

Insolvency cases: Banks to negotiate only with the highest bidder

作者:Candice    發表日期:2018-02-01 19:36:04

Banks have decided that they will only negotiate with the highest bidder while resolving cases of insolvency, according to a report in The Economic Times.

According to the report, the decision was taken at the Indian Banks' Association (IBA) meeting after consultation with the Insolvency and Bankruptcy Board of India and the resolution professionals.

The Insolvency and Bankruptcy Code (IBC) has not specified any rules on this matter. Traditionally, the creditor negotiates with the top bidders in an attempt to get the best value for the insolvent company.

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A senior official aware of the development told the newspaper, "Since the IBC code did not specify that negotiations can be held with only the highest bidder, clarity was required given that in some cases resolution professionals and lenders entered into talks with multiple players," said a senior official aware of the developments."

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Banks will now be following guidelines laid down by the Central Vigilance Commission (CVC), which favours the highest bidder in such cases.

The IBA has decided that the creditors will negotiate with the next highest bidder only if top highest bidder is found ineligible or backs out.

A senior bank executive told the newspaper: "This is expected to streamline the process. We also expect that serious players will up their bid, which ultimately helps in fetching a better price for the asset."

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