Partial sale of companies won’t be default under IBC

Under the bankruptcy law, the government may permit the partial transfer of a stressed company only if a complete rescue plan for its can not be secured. The proposed action is part of broader government efforts to reduce delays in resolution under the Insolvency and Bankruptcy Code and prevent the deterioration of stressed asset values. The focus will be on obtaining a single resolution plan for the entire organisation, but if that proves unsuccessful, multiple plans will be considered. Exis­ting regulations require a resolution plan for the entire insolvent company, without which the company is liquidated. The Ministry of Corporate Affairs has proposed inviting separate resolution plans for different 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.