Home / Companies / News /  IBBI favours several firms investing in a bankrupt co

NEW DELHI : A mix of investors buying parts of a bankrupt company is better than a single investor picking up the whole company as different investors may find individual units more strategically fitting, Insolvency and Bankruptcy Board of India has said in an explanation to rule changes issued earlier this month.

As per the changes that are now in force, administrators of bankrupt firms are required to re-invite bids for individual units of the company if there is no bidder for the whole company the first time.

Insolvency and Bankruptcy Board of India explained in a presentation posted on its website that corporate debtors have functional and non-functional assets in different businesses and locations.

Potential investors are interested in functional asset or an asset in one location or business alone.

Acquiring the stressed business as a whole may not be in line with the capacity and strategic objective of the potential investor, IBBI explained.

Besides, the Parliamentary Standing Committee on Finance too had highlighted the fact that bidders may be interested in select business units or assets rather than the entire business.

ABOUT THE AUTHOR

Gireesh Chandra Prasad

Gireesh has over 22 years of experience in business journalism covering diverse aspects of the economy, including finance, taxation, energy, aviation, corporate and bankruptcy laws, accounting and auditing.
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