MUMBAI: RBI has cleared the way for smaller asset reconstruction companies (ARCs) to participate in insolvency proceedings as co-resolution applicants and acquire financial assets under a resolution plan without meeting the Rs 1,000-crore net owned fund (NOF) threshold otherwise prescribed for ARCs to bid in insolvency proceedings.The clarification, issued last weekend, matters because it allows ARCs, which specialise in financing turnaround of distressed loan assets, to take over part of a defaulter’s debt through the Insolvency and Bankruptcy Code (IBC), while a strategic investor provides the capital and operational expertise needed to restart the…
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