Insolvency regulator IBBI has directed Insolvency Professionals (IPs) to list details of all unsold assets in respect of the ongoing liquidation processes on the eBKray platform from November 1.
They have also been directed to list all the assets within 7 days of submission of the asset memorandum to the Adjudicating Authority (AA) in respect of liquidation processes commencing on or after October 29, 2024.
IPs may use the eBKray auction platform for sale of assets on or after November 1, the Insolvency and Bankruptcy Board of India (IBBI) said in a circular on Tuesday.
To be deployed in pilot mode initially, the platform will be improved based on the usage experience. The full-fledged roll-out of the platform will be notified thereafter, an IBBI circular said.
A centralised listing and auction platform where details of all assets under liquidation of the corporate debtor is available to the public is seen to be a more effective mechanism.
Currently, liquidators in various liquidation processes sell the assets through auction platforms and the details of a company’s assets are typically made public only at the time of the auction notice. This leads to information asymmetry as potential buyers have limited time to assess the value of assets, often resulting in lower recovery rates.
PSB Alliance jointly owned by 12 PSBs
The eBKray platform is an online listing and auction platform owned and operated by PSB Alliance Pvt Ltd (PSBA), a company jointly owned by 12 public sector banks (PSBs).
The platform is currently used by PSBs to conduct auctions under the SAREFAESI Act. PSBA has now developed a module within the eBKray platform to facilitate the listing and auction of assets under IBC.
Anoop Rawat, Partner, Shardul Amarchand Mangaldas & Co, said the new circular mandates listing of all assets being sold in liquidation cases.
The platform will also have comprehensive details such as the status of the attachment or lien, geographical coordinates, and auction dates. “This platform is a great initiative to disseminate information about available assets, which is likely to improve the demand and value of these assets. IPs’ usage of the platform to host auctions appears to be a mere recommendation though,” he said.
Hari Hara Mishra, CEO, Association of ARCs in India, said the recent IBBI circular for a centralised platform for listing and auction of assets, will help disseminate information to a wider pool of interested bidders and help in value maximisation, while enhancing a greater level of transparency and disclosures in respect of 1,475 ongoing cases of liquidation with an estimated liquidation value of about ₹ 51,000 crore. “The impact will be more visible in Going Concern Sale (GCS),“ he added.
Siddharth Srivastava, Partner at Khaitan & Co, said the introduction of a centralised auction platform is a positive step towards streamlining the insolvency process, increasing bidder participation by facilitating informed decision-making, which will ultimately lead to value maximisation for the creditors.
“This clearly evidences that the regulator (IBBI) is monitoring the requirements of stakeholders and is making attempts to resolve them proactively,” Srivastava said.
Jyoti Prakash Gadia, Managing Director at Resurgent India, a SEBI registered Category 1 merchant bank, said the proposed adoption of a single centralised platform to be used by all stakeholders would lead to a wider market for prospective buyers and also ensure better price discovery and higher levels of recovery.
The authorities have brought about timely improvement in the processes aimed at removing information asymmetry to bring objectivity, he said.