Insolvency and Bankruptcy Code was brought in 2016 with a huge fan flare and was presented as a magic solution for the underlying problem of corporate bad loans. After 5 years, we can see its reality, of it being another piece of legislation that didn’t solve the problem despite continuous amendments to it. The recent case of Videocon presents the same stark picture where Committee of Creditors approved the acquisition by Vedanta Group at a cheap price of Rs 2962 crore, and banks took a total haircut (loss) of Rs 61876.63 crore. Later, on July 19th, in response to the appeal filed by a group of dissenting creditors, NCLAT has stayed this acquisition process for now. But, this is not the first instance where banks had to forego a large chunk of their lending through the IBC resolution process, in some cases loss was as high as 90% or even more.
The IBC resolution process has become an escape route for corporates instead of a recovery mechanism. The buyers are acquiring companies with a large set of assets at throwaway prices and borrower companies are getting away scot-free without facing any consequences.
This is a collection of articles compiled by Maharashtra State Bank Employees Federation, affiliated to All India Bank Employees Association, presenting the brutal reality of this legislation.
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