IBBI proposes new liquidation mechanism to boost recovery
Stressed assets that are going through liquidation under the insolvency law will now be listed and auctioned through a centralised electronic platform owned by a consortium of a dozen state-run banks to maximise recovery for creditors.
The Insolvency and Bankruptcy Board of India (IBBI) has tied up with the Indian Banks’ Association to facilitate the auction of stressed assets through the eBKray platform run by PSB Alliance, the regulator said in a circular.
eBKray has been conducting auctions for assets, mortgaged to state-run banks, under the SARFAESI Act for the past five years.
At present, assets of firms undergoing liquidation as per the IBC are auctioned via multiple platforms and the details of a company's assets are typically made public at the time of the auction notice.
“This practice leads to information asymmetry, as potential buyers have limited time to assess the value of the assets, often resulting in lower recovery rates,” the IBBI said in the order.
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