IBBI

Subject: Economy

Context:

The Corporate Affairs Ministry and the Insolvency and Bankruptcy Board of India (IBBI) have written to the Reserve Bank of India (RBI), asking the central bank to permit Asset Reconstruction Companies (ARCs) to bid for stressed assets under the Insolvency And Bankruptcy Code (IBC).

Concept:

• Under current regulations, Asset Reconstruction Companies (ARCs) are not allowed to bid for equity in stressed companies directly, though they can acquire equity through conversion of debt into equity.
• Allowing ARCs to participate would improve the probability of distressed companies receiving resolution plans.

IBBI

• The Insolvency and Bankruptcy Board of India was established on 1st October, 2016 under the Insolvency and Bankruptcy Code, 2016.
• It is a key pillar of the ecosystem responsible for implementation of the Code that consolidates and amends the laws relating to reorganization and insolvency resolution of corporate persons, partnership firms and individuals in a time bound manner for maximization of the value of assets of such persons, to promote entrepreneurship, availability of credit and balance the interests of all the stakeholders.
• It is a unique regulator: regulates a profession as well as processes.
• It has regulatory oversight over the Insolvency Professionals, Insolvency Professional Agencies, Insolvency Professional Entities and Information Utilities.
• It writes and enforces rules for processes, namely, corporate insolvency resolution, corporate liquidation, individual insolvency resolution and individual bankruptcy under the Code.