New Delhi: Auction of assets like land, buildings, plant and machinery belonging to businesses getting liquidated is likely to see a wider public participation, with the Insolvency and Bankruptcy Board of India (IBBI) planning to make these transactions more mainstream.
After asking liquidators on 29 October to list all such assets of companies facing liquidation on the eBkray (now renamed as baanknet.com) platform set up by an alliance of state-run banks, IBBI is now considering making it compulsory to conduct auctions through this portal, two persons informed about the development said.
“At present, the portal allows a viewer to express her interest on an asset being offered under the IBC (Insolvency and Bankruptcy Code) auction module and the person will be contacted by those responsible for the auction. E-auction through this portal for companies going for liquidation under IBC may be mandated in the future,” said the first of the two persons cited earlier, both of whom spoke on the condition of anonymity.
When IBBI, a regulator that supervises corporate insolvency proceedings, introduced compulsory listing of liquidation assets under the IBC on the portal from 1 November, it said liquidation professionals ‘may’ use it for the sale of assets in all ongoing cases, indicating its preference for auctions on this platform.
Clear advantage
The regulator sees a clear advantage in having a centralised portal where all IBC assets going for liquidation are available to the public, which may enhance the recovery value and improve transparency, said the person. The IBC was implemented in 2016 to resolve and expedite the reallocation of stressed assets.
Banks have been conducting e-auction on this portal for the last five years for the assets attached invoking the SARFAESI (Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest) Act. This law allows lenders to recover debt by attaching secured assets without having to go to court.
Queries emailed to the IBBI and to the ministry of corporate affairs early on Tuesday seeking comments for the story remained unanswered till press time.
Prior to IBBI’s 29 October circular, the assets were being auctioned on different platforms with the information being available only at the time of publishing of auction notice, leading to information asymmetry among potential bidders who were unable to track such auction notices, explained Siddharth Srivastava, partner at law firm Khaitan & Co.
Multiple platforms
The auctions were conducted via various platforms including Bank Eauctions (bankeauctions.com), National e-Governance Services Ltd. (nbid.nesl.co.in/landing-page), eAuction India (eauction.gov.in/eAuction/app ) etc., said Srivastava.
“Listing of assets on one centralized platform shall enhance information availability, transparency and efficiency among the interested bidders, thereby increasing their participation. This in turn would lead to increase in competition among stakeholders for the relevant assets auctioned, thereby increasing the potential for higher realization,” explained Srivastava.
Anjali Jain, partner at law firm Areness Law, said the eBkray (baanknet.com) platform has gained momentum recently in creating greater visibility, and thereby, a bigger market and a larger pool of potential bidders for distressed assets.
Since insolvency and liquidation run in a very fast-paced environment, it is important that news of an asset under liquidation being auctioned reaches a bigger target audience, said Jain, adding that this helps in creating greater competition, getting higher bids and in executing more successful auctions.
“The listing on eBKray will provide standard rules and regulations for all the assets sold and thus will ensure information symmetry, efficient marketing, proper and timely asset-evaluation, uniformity in procedural and operational flow and in better price discovery,” said Jain. User-friendly interface and uniformity and transparency in processes will also pave the way for making India a preferred distressed investment destination hub, she said.
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