“Insolvency and Bankruptcy Code (IBC) has kept pace with emerging market requirement by frequent amendments. It will continue to do so to remain pertinent for all times to come. This reform has to keep evolving, the key thing to remember is that embracing the future is not an option but necessity,” said Sandip Garg, Executive Director of Insolvency and Bankruptcy Board of India (IBBI) at ASSOCHAM 9th International Summit on Corporate Restructuring, M&A and Joint Venture.
He also informed that the enactment of IBC in 2016 came from a need for comprehensive insolvency resolution legislation which focussed on resolution of debtors, while taking care of the interest of creditors. He elaborated, “The Code recognises that insolvency is an outcome of market forces. It incentivises, facilitates, enables, and empowers market participants to resolve insolvency. The main objective of the Code is resolution. Liquidation is resorted to only in cases when market is not able to give any viable resolution plan.”
Reiterating that IBBI is deliberating on several concerns of IBC, CIRP and is taking steps to address them, Garg said, “The Code envisages resolution of the firm as a going concern, as closure of the firm destroys organisational capital. It facilitates continued operation of the firm as a going concern by moratorium on institution or continuation of suits or proceedings against the firm during the resolution period. It enables raising interim finances which has super priority in payment.” He added, “LegalPay, a tech-focused start-up, has identified interim finance as the moderate return low-risk investment in view of the super-priority it receives in the waterfall. I hope more players analyse it closely and come forward to provide interim finance.”
While speaking of challenges, he highlighted the need to reduce the number of litigations and suggested that “ASSOCHAM, being an association, can take an initiative to evolve a code of conduct” that will help the entire industry win.
Jyoti Jindgar Bhanot, Secretary (I/C), Competition Commission of India (CCI), Government of India, described the merger and acquisitions (M&A) landscape in India as dynamic. She elaborated, “In fact, in the wake of the pandemic, it has seen a paradigm shift in the way the industry functions and has given rise to issues and challenges for regulators and policymakers. The need of the hour is to have a healthy market environment that facilitates corporate restructuring and mergers. And it is imperative for regulators to have a proactive engagement with stakeholders to evolve systems and practices that balance facilitation and enforcement.” She added, “CCI is responding dynamically to the changes in the merger and acquisition landscape, particularly with the emergence of the new-age market.”
The next stage for the enterprises and partnerships should be a multidisciplinary approach, CA (Dr) Ashok Haldia, Chairman, Board of IIIP-ICAI said in his special address. To enable a trustworthy cooperation, there are some legal intricacies that shouldn’t be overlooked. Instead of making a significant investment in diversification for long-term benefit, core competency is the current approach, he added.
CS Ranjeet Pandey, Former President & Council Member, Institute of Company Secretaries of India (ICSI) shared that the magnitude of M&A transactions happened recently is huge and government proposing structural reforms in the relevant sectors is a steppingstone for ease of doing businesses and boosting economy. Prior to structuring the deal it is crucial to comprehend the business and transactions, he added.
Corporations have begun succession planning and to carry business forward in a consolidated manner, stated Pavan Kumar Vijay, Chairman, ASSOCHAM Task Force on Corporate Restructuring and M&A; Founder Corporate Professionals, in his introductory remarks. The future is promising for core businesses, he said, adding that “114 Bn direct transactions took place in 2021, primarily for M&A.” Adv. GP Madaan, Co-chairman, ASSOCHAM Task Force for Corporate Restructuring and M&A; & Managing Partner, Madaan Law Offices while applauding the steps taken by the NCLT by coming up with draft Orders stated that some legislative changes are desired specially pertaining to powers of CoC and introduction of arbitration in dispute arising in insolvency sector.
Basudev Mukherjee, ASG, ASSOCHAM gave his welcome address and said mergers and acquisitions are increasingly accepted in business strategy as Indian economy has undergone a massive transformation after the pandemic. This is a sign for giving a boost to private sector, ease of doing business and protecting the interests of stakeholders. The international summit organised by the Department of Corporate Affairs of ASSOCHAM had participation of eminent experts included from Industry, Regulators, Government, Legal professionals from India and overseas.