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Press Release

Right time for investing in Indian stressed assets: IBBI Chairperson

Jun 06, 2019


 

SINGAPORE, 6 June 2019: Dr M.S. Sahoo, Chairperson, Insolvency and Bankruptcy Board of India (IBBI) today said that the market for distressed assets in India is vast and will increase in days to come and there cannot be a better time than the present one for making investments in these.

 

Speaking at the FICCI-IBBI-HCI Singapore Conference on IBC (Insolvency and Bankruptcy Code), Dr Sahoo said, "The stressed assets market will increase as the Indian economy, which is huge, is likely to grow more than 7% over the next two decades, with simultaneous increase in innovation, competition, credit market and credit growth."

 

He further added, "Given the future potential of the Indian economy, it is a great opportunity as far as investors are concerned and, therefore, those seriously thinking about investment in India, there cannot be a better time than the present one when distressed assets are available through the Code (IBC)."

 

On the issue of haircut, Dr Sahoo said that the criticism about haircut is unfounded as it still provides a bonus when compared to the liquidation value of the firm and that it has been seen to decline over time in every other jurisdiction.

 

Dr Sahoo highlighted that there has been significant improvement in the credit behaviour of the corporates as repayment of debt is no longer an option but an obligation. The fear of CIRP (insolvency resolution) permanently taking away the control and management of the firm from existing promoters deters them from committing a default.

 

Mr Jawed Ashraf, High Commissioner of India in Singapore said that IBC resolution process presents attractive investment opportunities for Singapore-based companies. He added that India has had a successful partnership with Singapore and with the strong reform agenda of the Government, increase in economic efficiency, innovation and competitiveness, investment cycle is bound to strengthen further leading to overall economic health of the corporate sector.

 

Mr Sunil Mehta, Chairman, Indian Banks' Association and MD & CEO, Punjab National Bank illustrated the paradigm shift that IBC has generated. He added that NPAs are not just the problem of banks anymore, corporate debtors are equally concerned. "IBBI has been very open in changing the provisions, where required. This is the most commendable law for banks and a robust banking system would propel the economy," he added.

 

Mr G.K. Singh, Joint Secretary, Ministry of Corporate Affairs said that the progress under the Code has been outstanding. Bankruptcy court�s (NCLT) infrastructure is being strengthened and for continuous improvement, the ministry's Insolvency Law Committee has been made a Standing Committee with representation of stakeholders to fine tune policy decisions. It was further announced that the cross-border insolvency and individual insolvency are under consideration.

 

Mr Shardul Shroff, Chairman of FICCI National Committee on Stressed Assets and Executive Chairman, Shardul Amarchand Mangaldas & Co. highlighted that the insolvency resolution process under the Code is maturing very fast. He said that the significant quantum of debt resolved under the resolution process is a testimony of the success of the Code. The investors have tremendous opportunity of investment in the distress assets in India at an attractive valuation. However, there are some issues such as distribution of the resolution amount amongst the secured, unsecured and operational creditor which would need to be ultimately resolved by Supreme Court, he said.

 

Mr Sumit Khanna, Partner and Leader, Corporate Finance & Restructuring Services, Deloitte India said that the standout observation has been the behavioural change in both Borrowers and Lenders - the baseline has changed with the new realization that borrower's need to repay and that the law is secular and no one is above the law. "The journey over the last two years has been exhilarating. It has not only tested the mettle but also the character as a firm and as individuals of all who are part of the journey. Clarity of purpose, absolute commitment and a high integrity quotient were our guiding lights in the process", added Mr Khanna. He added that the introduction of pre-packed insolvency and mediation will lead to compression of timelines as also costs at the NCLT's and NCLAT this would be further augmented basis the positions already settled by the apex court.

 

The Conference was organised as part of the Roadshow on 'Insolvency and Bankruptcy Code of India - New Paradigm for Stressed Assets' in Singapore (6th -7th June 2019).

 

The Roadshow also includes meetings with focused groups of potential investors and professional firms. These meetings offer an opportunity to understand the details of the insolvency reforms and investment options and opportunities in stressed assets in India with the policy makers, regulators, leading law and consulting firms, and financial intermediaries.

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