Whistle-blowers alert authorities
A number of insolvency-bound companies, reeling under huge unserved loans, are scouting for front entities to buy them out in a distress sale under an ’asset reconstruction’ model with the help of ‘friendly’ IRPs, but have landed themselves under the regulatory scanner.
According to top regulatory officials, some of these firms are approaching senior NBFC executives, with a good reputation in the market, with a novel idea of setting up their own ‘asset reconstruction (ARC) start-ups’ and then bidding for the assets being sold under the insolvency process.
They are also trying to rope in some ‘friendly’ IRPs (Insolvency Resolution Professionals) to help achieve their motive of a ‘front entity’ acquiring the assets on sale, but the regulators and the government agencies have got a whiff of the whole design, including with the help of some whistle-blowers, a senior official said.
The companies which are currently under the scanner include those from the steel, power and textile sectors, the official said, but refused to divulge the names as an investigation is currently underway.