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At IBBI-FICCI huddle in New York, Arun Jaitley says bankruptcy code-led stressed assets sale 'great opportunity for foreign investors'

New York: India’s finance minister Arun Jaitley, principal economic advisor Sanjeev Sanyal and Chairman of the Insolvency and Bankruptcy Board of India (IBBI) M S Sahoo made a strong pitch for turbocharging domestic and foreign investment in Indian companies' stressed assets that will be going up for sale in the coming months as bankruptcy filings and their processing under India's new insolvency code gather momentum.

 At IBBI-FICCI huddle in New York, Arun Jaitley says bankruptcy code-led stressed assets sale great opportunity for foreign investors

File image of Arun Jaitley

Pinch-hitters in the Indian government’s finance and economics team spoke on India’s new bankruptcy code at a day long session led by IBBI and Federation of Indian Chambers of Commerce and Industry (FICCI) at the Indian consulate in uptown Manhattan, New York. The IBBI and FICCI cohort of bureaucrats and bankers/ finance and legal professionals is in the New York-Toronto area for a week. Some panel discussions featuring government and corporate stakeholders from Wednesday are embedded within this post, others can be found on our Facebook page.

“The number of assets that are going for takeover through the IBC (Indian Bankruptcy Code) process is extremely large. It's a great opportunity as far as investors are concerned and therefore those seriously thinking about investment in India", Jaitley said.

In the YouTube clip at the top of this post, Jaitley explains the backdrop of India's domestic corporate situation before the IBC 2016 came into force.

"I must admit the performance of the IBC has been much better than I expected", Jaitley said.

The "remarkable" shift in the creditor-debtor relationship in India and the number of cases being resolved before "crossing the red line" headlined Wednesday’s panel discussions. This has swiftly become a familiar theme in conversations surrounding India's new bankruptcy code and its implementation.

"The existing promoters - it is very hard for them to believe that there is a law and a real threat of them losing control of the business. It’s never happened before. That’s where the fight is, but this was all very badly needed. There have been amendments in the IBC. It will take a little time before the law gets settled. Going forward, the litigation will come down and the resolution will happen within the given time frame of 180-270 days. There were many chronic cases that got referred. For this process to succeed, it is important that these cases are referred at the earliest sign of trouble. Definitely there’s a paradigm shift in the creditor-debtor relationship in India" SBI chairman Rajnish Kumar said a couple of weeks ago, also in New York.

Maximising value for the organisation as distinct from the value for any of its constituents or individuals is at the heart of the ongoing work of IBBI, Sahoo said, responding to a question on whose value is being maximized by the IBC process. Jaitley, Sahoo and Sanyal - all three stressed the government's right-distancing from winners and losers in the IBC process.

“IBBI is core to the way we do our economics” said Sanjeev Sanyal, principal economic advisor to the Indian government. “We do not claim to know the answers to everything. Throuhgout the process, we have tinkered with the process and evolved. We want to have a sensible process to allow creative destruction to happen.”

In off-camera remarks, Mamta Suri, Executive Director IBBI told Firstpost that overall, the undercurrent now is of anxious lenders hoping to cash out at speed while the regulator’s goals are fundamentally different and more about resolving gridlock. “Many cases have been resolved before they were even filed because stakeholders came forward to settle when they saw the first signs.”

“Pre-insolvency is a bigger opportunity - India's NPA numbers are more than the GDP of many countries”, said Sanjeev Krishna, Partner, PriceWaterhouse Coopers. Other speakers at the event included: Shardul Shroff, Executive Chairman and National Practice Head, Shardul Amarchand Mangaldas and Co; Nilanjan Sinha, Legal head of ICICI Bank; Manish Aggarwal, Partner, KPMG; Arunish Chawla, Minister Economic, Indian Embassy in the US; Debra Dandeneau, Partner, Baker and McKenzie; Sanjay Gupta of Cost Accountants of India.

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Updated Date: Dec 06, 2018 08:06:18 IST