Resolution of Stressed Assets under the Insolvency and Bankruptcy Code, 2016: A Structured Approach to Financial Rehabilitation

NPA management

The Insolvency and Bankruptcy Code (IBC), 2016 provides a comprehensive and time-bound framework for the resolution of stressed assets in India. It marks a paradigm shift from the traditional debtor-in-possession model to a creditor-in-control approach, with the objective of maximizing asset value and fostering stronger credit discipline. The National Company Law Tribunal (NCLT) is designated…

Available Frameworks for Asset Restructuring through the Sale of Financial Assets

Loans and advances, Risk Management

The restructuring of assets, particularly through the sale of financial assets, constitutes a strategic initiative aimed at enhancing an entity’s financial stability and operational efficiency. This process typically involves the divestment of specific financial instruments—such as loans or receivables—to improve liquidity, reduce leverage, and reallocate capital toward core business activities or growth initiatives. Asset sales…

Explained: Insolvency Resolution Process for Corporate Persons regulation 2020: Fourth amendment to IBBI 2016

Loans and advances

The Insolvency and Bankruptcy Board of India (IBBI) notified the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) (Fourth Amendment) Regulations, 2020 on August 7, 2020. As per the latest amendment, which is effective from 07th August 2020, the authorized representative of creditors shall seek voting instructions only after the circulation…

Understanding the proceedings against large Corporates under IBC

Law related to collateral-securities, Legal and Regulatory aspects of banking, Loans and advances

Following the ordinance empowering RBI to lay down the process of initiating steps under the Insolvency and Bankruptcy Code (IBC), an Internal Advisory Committee (IAC) is set up by RBI to oversee the specific steps that are initiated by bankers for resolution of a bad debt. In its first meeting on June 12, 2017, the…

RBI Guidelines on the Restructuring of Advances by Banks

NPA management, Risk Management

The Reserve Bank of India (RBI) issued comprehensive guidelines to enable the restructuring of advances by banks in response to the financial distress caused by the COVID-19 pandemic. These guidelines allow for a one-time modification of loan terms for eligible borrowers without necessitating a downgrade in asset classification, provided that specific regulatory conditions are met.…

Personal guarantors to corporate debtors comes under IBC regime

Legal and Regulatory aspects of banking, NPA management

On Friday (15th November 2019), the Ministry of Corporate affairs notified “Application to Adjudicating Authority for Insolvency Resolution Process for Personal Guarantors to Corporate Debtors) Rules, 2019”. [WAS PUBLISHED IN THE GAZETTE OF INDIA, PART II, SECTION 3, SUBSECTION (i)]. The new rule called in short as “Insolvency and Bankruptcy rule 2019” shall come into…

Strategic Options Available to Banks for the Resolution of Stressed Assets

Loans and advances, Risk Management

Stressed assets, primarily comprising non-performing loans (NPLs), represent a significant challenge for banks and financial institutions. Effective resolution of such assets is crucial to preserving financial stability, optimizing asset quality, and ensuring capital adequacy. To this end, banks employ a range of recovery strategies, including debt restructuring, asset reconstruction, legal proceedings, and one-time settlements, among…

No relief to personal guarantors under bankruptcy code: Supreme Court

Loans and advances

The Supreme Court on Thursday in a significant ruling upheld the constitutionality of Insolvency and Bankruptcy Code (IBC), including allowing creditors to initiate insolvency proceedings against personal guarantors. The Court dismissed over 200 petitions that challenged the legal validity of the code. The provisions relating to personal guarantors were introduced under the Insolvency and Bankruptcy…

Insolvency and Bankruptcy Code (IBC): List of restraints on FSPs during the moratorium period

Loans and advances, NPA management

Today (29.11.2019) RBI has filed an application under insolvency and liquidation proceeding against “ Dewan Housing Finance Corporation Limited” under Section 227 read with clause (zk) of sub-section (2) of Section 239 of the Insolvency and Bankruptcy Code (IBC), 2016, read with Rules 5 and 6 of the Insolvency and Bankruptcy (Insolvency and Liquidation Proceedings…