Unraveling the Su-Kam Saga: A Detailed Look at the IBC

Why are Fair Value and Liquidation Value Determined under the IBC?

The Insolvency and Bankruptcy Code (IBC) of India mandates the determination of Fair Value and Liquidation Value for a comprehensive understanding. This article, Su-Kam Saga: A Case for Rethinking the IBC Explained, delves into the intricacies involved. Unraveling the Su-Kam Saga: A Detailed Look at the IBC

corporate debtor undergoing insolvency proceedings.

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Unraveling the Su-Kam Saga: A Detailed Look at the IBC

These values serve several crucial purposes:

Informed Decision Making:
- Creditors: The fair value provides creditors with a benchmark to assess the viability of potential resolution plans and determine the appropriate level of recovery.
- Resolution Applicants: Knowing the fair value helps potential buyers evaluate the asset’s worth and structure their bids accordingly.
Transparency and Accountability:
- Determining fair value and liquidation value ensures transparency and accountability in the insolvency proceedings. It prevents undervaluation or overvaluation of assets, safeguarding the interests of all stakeholders.
Valuation Benchmark:
- The fair value and liquidation value serve as a benchmark for comparing with the resolution plan’s offer price. If the offer price is significantly below the fair value, it raises concerns about the resolution plan’s adequacy.
Efficient Resource Allocation:
- By determining the fair value, the IBC facilitates the efficient allocation of resources. It helps ensure that the assets are sold at their actual market value, maximizing the recovery for creditors.
- Now, here is a catch: If the valuation is done without the knowledge of a promoter, then why not link the promoter and COC based on the Fair value first? If the company is running, then only one can get a fair valuation of the company.

Unraveling the Su-Kam Saga: A Detailed Look at the IBC

The balance between the Promoter Guarantor and the Creditors needs to be balanced. In most cases, the promoter is the personal guarantor of the Corporate debtor, and he is the one who is going to get the brunt of the Insolvency proceedings. First, his company will be taken, and then his personal assets will be taken for the personal guarantee. COC has no responsibility for the fair valuation as they can sell the company to the 1% of the fair valuation as there is no answerability on the part of the COC and promoter after giving the company and his life earnings have no role to play. He can only sit in one corner and see his company, which he built with sweat and blood, ruined before him. The banks make him a willful defaulter and fraud without any basis. Creditors are free from any responsibility as the promoter can not bid for his own company under sec 29A, and the COC can sell the company at any value, no questions asked. Was this the legislature’s intent when defining the IBC Law? I feel the Lawmakers need to interfere here and amend the law by making the valuation process a basis for the Promoter’s integrity or conduct. He should be responsible for paying the balance amount as the personal guarantee after using the fair value as the fair value, although done without his knowledge, should benefit the promoter as he was responsible for creating that much value when the company was taken under the NCLT. I provide an example of Su-kam, which used to be owned by me and was taken over by the COC and RP in April 2018. The moment they took over the company, which was a running company doing 500 CR revenue, and had they done a fair valuation, the company would not have been more than 500 Cr then. But they did the valuation and got two valuations, which were nearly 300 Cr. Now, they ran the company for one year, took further credit from the market, and closed down the company after one year. After closing the company, they kept making legal and other management expenses, did not give the money to the security agencies, deposited the electricity bill for locations in different areas and had a lot of thefts on all the premises. Under the approval of COC, the liquidator sells the company in the Corona period, and the banks get a mere 8 Cr. What kind of a system is this? I was ready to give 250 Cr with the help of the Kotak bank, and they wanted to punish me for that. But what a loss and shame for the nation that the company is sold at a mere 49 Cr. Employees lost their jobs, The suppliers lost money, and two of the suppliers went to the NCLT because of the fall of Su-kam. Dealers and distributors saw the brunt as there was no service support. Customers were left crying as the liquidator ensured no communication number was left in working condition and no person was left to take the calls and tell them the truth. All the market knows is that the company was closed by Mr Kunwer Sachdev as he was the owner, and all the calls got diverted to my mobile number with a lot of anguish from dealers and customers. One can imagine that in one day, there used to be 700 calls for the service, and all these calls were stopped. If the company was destroyed at this level, who would be responsible? Who benefits from this situation? The liquidator and the new buyer of Su-kam. Who acquired properties worth 300 Crore and the brand of Su-kam free of cost, and COC, which was the supreme power, let this happen. But now, if this has happened and the promoter has suffered. The promoter has to go through the personal insolvency process as he will be humiliated again in the newspapers and take all the properties left in his name. The story does not end here as the next is the Promoter having an avoidance application going on in the NCLT, which is now taken over by the new owners of Su-kam, who got the knife in their hand to cut the promoter. COC comes after the promoter’s assets under personal insolvency. The CBI cases and ED cases will never be stopped. So, the outcome of this IBC law is the destruction of entrepreneurship in India. The next generations who have seen things happening to us dare not take risks in life and play the safe game. The tale of Su-Kam is a cautionary one. It highlights the challenges promoters face in the maelstrom of insolvency proceedings. It raises questions about the balance between protecting creditors’ interests and ensuring fair treatment for promoters. And it underscores the need for a more nuanced approach to insolvency, one that considers the broader implications of corporate failures and their impact on individuals and communities.

Unraveling the Su-Kam Saga: A Detailed Look at the IBC

Unraveling the Su-Kam Saga

Unraveling the Su-Kam Saga: A Detailed Look at the IBC. This blog offers insight into the intricate details surrounding the Su-Kam saga, providing a detailed look into the IBC process.

Unraveling the Su-Kam Saga: A Detailed Look at the IBC