Bankruptcy board set to tackle group insolvency
India’s bankruptcy regulator is seeking to amend rules to make the Insolvency and Bankruptcy Code (IBC) suitable for handling group insolvency, with accounts such as Videocon, Sachet Infra and Lavasa underscoring the problem of indebtedness at the group level. A panel on group insolvency has submitted its report to the Insolvency and Bankruptcy Board of India (IBBI), proposing reforms in the legal framework to address group insolvency. The report has recommended that the definition of ‘group’ be specific, and it may include holding, subsidiary and associate companies. In case of Videocon, the National Company Law Tribunal (NCLT) had ordered consolidation of assets and liabilities of 13 group entities. The Videocon Group operated as a single economic unit with inter- dependence and also had common lenders, where all 13 companies were co-obligators.
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