Understanding the Rushed IBBI Guidelines for COC

News of Business Standard newspaper on IBBI guidelines

Understanding the Rushed IBBI Guidelines for COC is crucial when navigating the complexities of insolvency resolution in India. To fully comprehend the im

plications, it is crucial to focus on understanding the rushed IBBI guidelines for COC.

y-not-be-effective-experts-124082300872_1.html”>Ibbi guidelines for CoC need monitoring mechanism, say IBC experts | Finance News – Business Standard (business-standard.com)

Key Points:

• The focus is on understanding the recently issued IBBI guidelines for COCs, which some experts believe were rushed.
• A recent High Court case raised questions about a COC’s decision to sell a company at a significantly lower price than its fair value.
• The case also points out how the COC, while managing the company during insolvency, may not be held accountable for maintaining its fair value.
• The author questions the purpose of fair value assessments if the promoter (company owner) doesn’t benefit and the COC isn’t responsible for maintaining it.

Additional Information:

• The passage defines “fair value” according to the CIRP (Corporate Insolvency Resolution Process) Regulations.

The major point that came out from this High Court judgement was that the COC sold the company at a price which is un imaginable to the people as the fair value of the company was 300 Cr, and after taking over the company, the COC, which was deciding every move of the company what responsibility they have to intact the fair value. As the company was running at the time of going to NCLT, the RP and COC ran it for one year and created a debt of more than 40 Cr before closing it for two years to wash off the responsibility. The company was sold in the Corona period by the Liquidator and COC when the whole world was in a state of shock, and there was no emergency as the company had already been closed for more than two years. The company was closed, and the money in the account was used for legal fees and other expenses rather than keeping the service small call centre or email accounts. There was no one to listen to the Su-kam customers, dealers, employees and vendors, and the promoter was left with all these responsibilities of attending such calls to have the brunt of his failure this way also.

Guidance of valuation

So here, the law point is: Why have fair value at all? Why burden the already sick company with two reputed valuers when no one will give a dam to that report? If the promoter does not get absolved based on his company’s fair valuation and COC is not responsible for taking care of Fair valuation, then what is the need to waste money? That’s my point of view.

Fair Value: Regulation 2(hb) of CIRP Regulations defines Fair Value as “estimated realizable
value of the assets of the corporate debtor if they were to be exchanged on the insolvency
commencement date between a willing buyer and a willing seller in an arm’s length
transaction, after proper marketing and where the parties had acted knowledgeably,
prudently and without compulsion”.