My perspectives on litigation challenges under Insolvency and Bankruptcy Code

When I met a prominent international investor last week, he did not seem very enthusiastic about IBC. One of the key points he made was that most of the major insolvency cases have witnessed some form of litigation.  Some of the litigation cases have been very interesting as there is a balancing to be achieved between maximization of value to lenders and going by the law book. We need to get around questions like can bids be reopened in case of a. Late bid submissions – In Bhushan Power and Steel case, Liberty House (UK) moved NCLT after its bid was rejected since the last date for receiving bids was over (though the bids hadn’t been opened) b. Party loosing the bid subsequently wants to up its bid – In the case of Binani Cement, the best bid came from a consortium and they were declared a winner. Thereafter the losing bidder, then did a deal with the Binanis to buy them out and repay the banks in full. In both the cases, the later bids were providing more to the lenders for sure but perhaps at the cost of contravening the spirit of the law by  changing the rules of the game.  There will be court rulings which will settle the matter for good and let’s hope it is for the good.  #IBC

By  Avishek Gupta, Partner – Optimus Resolution