The 14-member panel reviewing the Insolvency and Bankruptcy Code (IBC) is considering giving the rights such as halting resolution proceedings, if the lenders agree, to the National Company Law Tribunal (NCLT), reports The Economic Times
Currently, only the Supreme Court, under Article 142, has the right to do so. The Panel sources told the daily that the move should also have 90% support from lenders.
The Panel sources told ET that it can help avoid complications. One such example in that of the Binani Cement resolution process.
“Many assume that a losing bidder would offer to buy out the bankrupt company by sweetening the offer after the bids are disclosed to lenders. If this suggestion is accepted, it will have a significant implication on the bidding process,” sources told the daily.
This move will help banks minimize their losses on defaulted loans. The panel’s recommendation of 90% lender support gives prospective buyers an opportunity to strike a one-time settlement with banks, operational creditors and employees during the resolution process, the sources reasoned.
Along with this, the Panel is also planning to recommend that homebuyers should be treated on par with unsecured creditors and lenders. They also suggest that the buyers should be allowed to implement a resolution plan if two-thirds of them by value agree to it, versus 75% now. These moves will help in protecting homebuyers.