Now the Liquidators Can Assign or Transfer the 'Not Readily Realisable Assets' to any Person

The Insolvency and Bankruptcy Board of India (IBBI) has announced its Liquidation Process, Fourth Amendment Regulations, 2020,  to modify the Insolvency and Bankruptcy Board of India Liquidation Process Regulations, 2016. (vide its notification dated 13th November 2020)

After consulting with all stakeholders' consultation committee, IBBI has modified the liquidation process regulations under the IBC, to authorize the liquidators to transfer or assign "not readily realisable assets" of the corporate debtor to any person. The Insolvency and Bankruptcy Code (IBC) predicts early closure of liquidation process so that the assets of the corporate debtor are released for alternate uses quickly and efficiently.  However, the process takes longer where the liquidation estate includes a "not readily realisable asset".

If the liquidator fails to transfer the assets to anyone, he would have to distribute the assets amongst stakeholders, with the approval of the adjudicating authority.

Any asset included in the liquidation estate which could not be sold through available options is called "not readily realisable asset"; it includes contingent or disputed assets, and assets underlying proceedings for preferential, undervalued, extortionate credit, and fraudulent transactions.

Based on a notification from IBBI "Thus, a liquidator shall attempt to sell the assets at the first instance, failing which he may assign or transfer an asset to any person, in consultation with the stakeholders' consultation committee, and failing which he may distribute the undisposed of assets amongst stakeholders, with the approval of the AA."

Noting that there may be a creditor who does not want to wait for completion of liquidation process till his debt be realised, the board brought changes into the regulations for insolvency resolution process for corporate persons and information utilities regulations, 2020, as well.

As an statement by IBBI, "The IBBI amended the Regulations to enable a creditor to assign or transfer the debt due to it to any other person in accordance with the laws for the time being in force dealing with such assignment or transfer."