IBC section 32 (A)Date: 22 January 2021 Tags: Judiciary & Judgments
The Supreme Court held that the successful bidders for a corporate debtor under the Insolvency and Bankruptcy Code (IBC) would be immune from any investigations being conducted either by any investigating agencies.
The protection to successful bidders and the assets of a corporate debtor are provided by the rules under Section 32A of the IBC.
The SC upheld the validity of Section 32A of IBC and said it was important for the IBC to attract bidders who would offer reasonable and fair value for the corporate debtor to ensure the timely completion of corporate insolvency resolution process (CIRP).
Such protection must also extend to the assets of a corporate debtor, which form a crucial attraction for potential bidders and helps them in assessing and placing a fair bid for the company, which will help banks clean up their books of bad loans.
The immunity would be applicable only if there is an approved resolution plan, and a change in the management control of the corporate debtor.
Significance of judgement
Since the IBC came into being in 2016, the implementation of resolution plan of several big ticket cases has been delayed because of various challenges mounted by its own agencies and regulators.
With the Supreme Court upholding the validity of Section 32 A, the cases such as that of Bhushan Power are expected to be completed soon.
Experts also said that this will give confidence to other bidders to proceed with confidence while bidding on such disputed companies and their assets.