Liquidation of company under IBC some times better than resolution: NCLAT member
Liquidation of a company under the Insolvency and Bankruptcy Code (IBC) is some times better than a resolution as it throws opportunity for alternative use of its assets and add value to the country, said NCLAT Technical Member Balvinder Singh. Suggesting to look into all parameters during the corporate insolvency, Singh said that there are some constraints during the process and the focus should not only be to maximise the value of the stressed assets.
The main focus of the insolvency is that if an organisation has a chance to survive, then it must be allowed to survive, he added. "Liquidation is throwing assets for an alternative use. It looks like that liquidation is a dirty word. A corporation has one interest - national interest and alternative interest and may add value to the country," he said.
According to him, many times, the companies land in trouble because of the some wrong decision of its management and promoters but that does not mean, they should not be allowed to run. "First, opportunity should be provided, if some one can run his business. A try has to be given...," said Singh adding "if that is viable then let it be viable".
"The main focus should not be only on loss but also on the survivability of the company and organisation," he said while speaking at a conference here organised by industry body PHDCCI. Singh further said that it is not certain that "liquidation would get lesser value and resolution more".
He also said that many times cases have come where the liquidation value of a company is higher than the bid value of the resolution plan as it has to take care of several factors. Singh also suggested to complete the insolvency period in a time-bound manner, which is the essence of the IBC.
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