Group insolvency rules to solve complex cases soon
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Aug 25, 2025 | Page No.: 1 | Position: Top Center | Source: Gireesh Chandra Prasad | Sq Cm: 692 | AVE: 449478 | PR Value: 2247390
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ice ca vies Insolvency and ard ITTTerzr• ankrti rtt Group insolvency rules to solve complex cases soon ? P1 Group insolvency rules to solve complex cases soon Individual cos creditors to be bound by a coordination pact enforceable by NCLT Gireesh Chandra Prasad itors CoC is formed for everycom- gireesh p livemint com CASE DIARY pany undergoing bankruptcy reso- NEW DELHI lution The new rules will propose forming a new panel comprising The Centre is laying the members from the CoCs of insol- groundwork for a new vent group companies This apex insolvency framework committee will oversee the debt that could see a single resolution plan the people cited administrator and a above explained common bench for resolving bank- Queries emailed to the ministry ruptcies of related companies of corporate affairs and to IBBI on within the same business group Friday seeking comments According to two people familiar remained unanswered with the matter the new frame- The rules will be designed to work is designed to make the pro- keep the cost of debt resolution of cess more efficient cut costs and the entities minimum avoid dupli- improve the overall value for cred- cation preserve the synergy among itors The proposed group insol- the entities and improve the overall vency rules aim to streamline the value realization of the enterprises complex and often lengthy process the first person cited above said ofuntangling distressed corporate Consolidating the bankruptcy empires GROUP THERAPY resolution of Videocon Industries The rules will be designed to COMMON tribunal APEX panel of REFORMS to Ltd and its 12 associate enterprises keep the cost of debt resolution of bench to streamline creditors to oversee focus on efficiency was one of the first attempts for a the entities minimum avoid dupli- group bankruptcies resolutions faster debt recovery group debt resolution in India cation preserve the synergy among under IBC but the process that the entities and improve the overall started in 2019 winds on An earlier value realization of the enter- mon ownership or control a topic will be empowered to enforce the consolidated plan which would prises one of the two people said that has been frequently discussed agreement Such an agreement will have led to 95 haircuts to credit- on the condition of anonymity The since the IBC s debut in 2016 set the protocols for information ors was challenged by some of the rules will be issued once the IBC Distressed group companies will sharing joint negotiations claim creditors A subsequent attempt Amendment Bill 2025 is cleared have to sign a coordination agree- management and restructure of met with resistance from the pro- by the Parliament ment which will be binding on multiple entities as one economic moter and the successful bidder The new framework addresses them and their creditors the peo- unit without affectingtheir status The resolution professional the long-standing need fora system ple cited above said The National as separate legal entities to rescue companies linked by com- Company Law Tribunal NCLT Under IBC a committee of cred- TURN TO PAGE 6 Govt works on group insolvency rules to resolve complex cases FROM PAGE 1 ognition to group insolvency proceedings However differ- appointed is still running the ent benches have adopted dif- affairs of the Videocon group ferent methodologies for con- companies solidated group insolvencypro- Unlike Videocon some of cesses The proposed the other prominent business amendments have laid down groups have gone into individ- broad principles of undertaking ual bankruptcy proceedings group insolvency proceedings These entities include Essar including common adjudicat- Group companies Essar Steel ing authorityto avoid multiplic- Ltd and Essar Power MP Ltd ity and divergence ofviews and Reliance ADA Group entities achieving process efficiency Reliance Communications Ltd through common insolvency Reliance Infratel Ltd and Reli- Coordinating procedures is professional said Rawat ance Telecom Ltd and Jaypee crucial in group bankruptcy It is interesting to note that Group entities Jaypee Infrat- resolution ISTOCKPHOTO the focus is more on procedural ech Ltd and Jaiprakash Associ- efficiencies without expressly ates Ltd according to informa- coordination as indicated in the prescribing commingling of tion available from bankruptcy proposed IBC Amendment assets and liabilities We shall rule maker Insolvency and Bill 2025 said Surendra Raj wait to see how rules deal with Bankruptcy Board of India Gang partner deals debt and the complexities said Rawat Experts said that coordinat- special situations at Grant Surendra Raj Gang of Grant ing procedures is crucial in Thornton Bharat LLP Thornton Bharat said lenders group bankruptcy resolution The proposed amendments financial creditors would be It would be interesting to in the Bill intend to preserve required to analyzegroup struc- see what would be provided in and maximize the value of tureswellandwouldbe required the rules which are to be noti- assets of group entities to coordinate better with com- fied by the central government explained Anoop Rawat mittee ofcreditorsofothergroup relating to group insolvency In national practice head insol- entities for smooth resolution most of the foreign jurisdic- vency and Restructuring at law In such complex situations tions having advanced insol- firm Shardul Amarchand Man- it would be expected that deci- vency regimes the larger focus galdas Co sion-making from the credit- to address a group insolvency So far adjudicating authori- ors committee is also quick scenario starts with procedural ties have provided judicial rec- he said