Insolvency and Bankruptcy Board of India (IBBI) jointly with the State Bank of India & Indian Banks' Association (IBA) organizes a One Day Workshop (in Hybrid Mode) for bank officers on Committee of Creditors: An Institution of Public Faith on 13th December 2021 at Mumbai.
It is normal for a firm to have stress in a market economy. Such stress, however, needs to be addressed expeditiously in an orderly manner. The Insolvency and Bankruptcy Code, 2016 (Code) envisages a market mechanism to address this situation swiftly.
The Code recognises that a limited liability firm is a contract between equity and debt. As long as the debt is serviced; the equity, represented by a Board of Directors, has complete control of the firm. When the firm fails to service its debt, control of the firm shifts to the creditors, represented by a Committee of Creditors (CoC), for resolving stress. The Code envisages the CoC to comprise financial creditors for the process to be speedy, effective, and efficient.
The Code assigns the role of a saviour to the CoC. It recognises a wider public interest in resolving corporate insolvencies [Kridhan Infrastructure Pvt. Ltd. Vs. Venkatesan Sankaranarayan & Ors. (2020)]. It is a beneficial legislation that aims to put the firm back on its feet. It enables the revival and continuation of the firm by protecting it from its own management and from closure by liquidation. The first and foremost objective of the Code is reorganisation and insolvency resolution of the firm [Swiss Ribbons Pvt. Ltd. & Anr. Vs. Union of India & Ors. (2019)]. The second-order objective is maximising the value of assets of the firm and the third-order objective is promoting entrepreneurship, availability of credit and balancing the interests of all stakeholders. This order of objectives is sacrosanct [Binani Industries Limited Vs. Bank of Baroda & Anr. (2018)]. If there is a resolution applicant who can continue to run the firm as a going concern, every effort must be made to try and see that this is made possible [Arcelor Mittal India Private Limited Vs. Satish Kumar Gupta and Ors. (2018)].
The CoC has the responsibility to rescue viable firms and close unviable ones. Its commercial wisdom is supreme. An inappropriate decision that lets a viable firm close or an unviable firm survive is very costly for stakeholders and the economy. The CoC needs to rescue a viable firm through a resolution plan which (i) has been received from a credible and capable resolution applicant, (ii) complies with the applicable laws, (iii) is feasible and viable, (iv) has the potential to address the stress, (v) has provision for effective implementation of the plan, and (vi) maximises the value of the assets of the firm, irrespective of realisation for creditors under the plan. This ensures sustained resolution.
The CoC has powers commensurate with its responsibilities. It can decide a haircut of any magnitude to any or all stakeholders required for rescuing the firm; and to seek and choose the best resolution plan from the market, unlike other avenues that allow creditors to find a resolution only from existing promoters. The resolution plan can entail a change of management, technology, or product portfolio; acquisition or disposal of assets, businesses, or undertakings; restructuring of the organisation, business model, ownership, or balance sheet; strategy of turn-around, buy-out, merger, amalgamation, acquisition, or takeover; and so on, as may be necessary to resolve the stress of the firm. Its decisions must increase the value of the firm, which is valued at 100 at the commencement of the resolution process, to at least 101 the next year, 102 the year after, and so on. Such value maximisation with sustained resolution requires strategies much beyond the restructuring of liabilities. This requires tremendous commercial dexterity and acumen on the part of members of the CoC.
The responsibility comes with accountability. Since the decisions of the CoC impact the life of the firm and consequently its stakeholders, it needs to be fair and transparent in its decisions.
The manner of rescue is as important as the rescue itself. The manner of rescue must ensure optimum utilisation of limited resources of the economy, promote the availability of credit and entrepreneurship. The conduct of the CoC and its members must be above Board, to justify their exalted position in the Code.
The institution of CoC has grown in strength and earned respectability over the last 4-5 years. To further strengthen the institution, a one-day hybrid mode workshop, on the theme, “Committee of Creditors: An Institution of Public Faith”, has been scheduled for 13th December 2021.
OBJECTIVES
The workshop aims to develop an understanding of the role of and expectations from the CoC, under the Code and to build the capacity of institutional financial creditors to ensure that the CoC:
discharges its statutory duties and responsibilities with utmost care and diligence;
has the capability and motivation to take business decisions in terms of generating multiple competing resolution plans and approving the best among them; and
considers and balances the interest of all stakeholders in a resolution process.
PARTICIPANTS
This workshop is intended for senior-level officers (Assistant General Managers and above) of Scheduled Commercial Banks and Financial Institutions, who are decision-makers under the Code.
Schedule:
Session Subject
10.00 -10.45 Inauguration and Context Setting
10.45 - 12.00 Deciding to grant a loan; Choosing a remedy in case of default;
Guarantee and security; Preparing for using the Code; and
Initiating CIRP.
12.15 - 13.30 Role of CoC in a CIRP; Dealing with Insolvency Professional,
Corporate Debtor, and Adjudicating Authority; Relationship
among members inter se, and interface with operational creditors
and other stakeholders; Avoidance transactions; and Emerging
jurisprudence.
14.30 - 15.15 Deciding to rescue or liquidate a corporate debtor; Choosing a
resolution plan; Selecting a resolution applicant; What is
commercial and what is not commercial for the CoC; and
Valuations and their uses in CIRP.
15.30 - 16.45 Code of Conduct for CoC.
16.45 - 17.00 Valedictory Session
Faculty:
Mr. Subrata Biswas, Deputy Managing Director, SBI; Mr. Ritesh Kavdia, Executive Director, IBBI; Mr. Gopal Murli Bhagat, Deputy Chief Executive, IBA; Mr. Sanjeev Pandey, Deputy General Manager, SBI; Mr. Satish Kumar Gupta, Insolvency Professional; Mr. Vijay V. Iyer, Insolvency Professional; Dr. (Ms.) Kokila Jayaram, Deputy General Manager, IBBI; Mr. Suhail Nathani, Founding Partner, Economic Laws Practice.
Nomination and Registration:
There is no fee for participation in the workshop. However, the number of participants in a workshop is limited to 30 to ensure effective interactions. The delegates must confirm their participation by 10.12.2021: at:
Mode of Delivery:
Hybrid Mode (Physical and Online) Workshop: The link for the workshop will be shared with the officers nominated by the Banks/Financial Institutions, closer to the date of the workshop.
For more information, Please contact:
Mr. Pankaj Kumar, Assistant General Manager, IBBI
Contact No.: 7506921274 and 011-23462830
Email: pankaj.kumar1@ibbi.gov.in
Comments