A dissenting creditor, who may have disagreed with other lenders to draw a resolution plan with a common idea will now be assured of liquidation value, at least.
In an amendment to Insolvency and Bankruptcy Code, a resolution plan needs to identify specific sources of funds that will be used for paying the liquidation value due to dissenting creditors, Insolvency and Bankruptcy Board of India said in a late evening release on Monday.
For this purpose, the ‘dissenting financial creditor’, according to amended regulations, means a financial creditor who voted against the resolution plan or abstained from voting for the resolution plan, approved by the committee of creditors.
In the past one year about 475 cases were admitted at the National Company Law Tribunals, dedicated bankruptcy courts. Some cases -9-10 companies – have seen the light of the day with successful resolution plans. The courts have ordered about 5% of admitted companies for liquidation.
According to the amendments, it is not necessary to disclose ‘liquidation value’ in the information memorandum.
After the receipt of resolution plan(s)…..the resolution professional shall provide the liquidation value to every member of the committee of creditors after obtaining an undertaking from the member to the effect that such member shall maintain confidentiality of the liquidation value, IBBI said.
The amendments have come into force from the first day of the new year 2018.