This initiative taken by the government aims at introducing a shorter, time bound, online financial bidding process in corporate insolvency process under the Code of 2016- this in turn will ensure the timeline as proscribed under the Code to be followed at all times, will improve transparency and also will reduce unnecessary litigation.
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Current scenario
The bidding process which is existent is not fool proof. Often after the bidding process has come to an end keep it open for potential bidders individually, which in turn has prolonged the process of liquidation or insolvency. This will also ensure the proposed time frame of 330 days provided under the Code in a Insolvency Resolution Process which also includes time provided for litigation.
Proposed idea
The government found its ruse majorly from the Bhushan Power and Steel case, where its saw a prolonged time frame given for e bidding process. Corporate affairs secretary Injeti Srinivas explained how the proposed idea should work
“Once a resolution applicant submits a plan and the plan meets basic eligibility criteria, you can shortlist eligible ones and then give them a window for, say 48 hours, to do financial bidding on a platform “.
