Partial sale of companies won’t be default under IBC

Under the bankruptcy law, the government could permit the partial transfer of a corporate debtor only if the distressed entity fails to secure a complete rescue plan.
The proposed action is part of broader government efforts to reduce delay in resolution under the Insolvency and Bankruptcy Code (IBC) and prevent the deterioration of stressed asset value. The focus would be on obtaining a single resolution plan for the entire organisation; if that endeavour fails, multiple plans would be considered. Existing regulations permit the resolution plan for the entire insolvent company, without which, the company is liquidated.
The ministry of corporate affairs proposed that separate resolution plans could be invited for separate parts of an insolvent firm to maximise value realisation, as it can be difficult to find a single resolution applicant willing to take over the entire debtor. The modifications will be incorporated into the IBC amendments that are currently being formalised.