NEW DELHI:The government has introduced the concept of fair value for bankrupt companies undergoing resolution and an evaluation matrix for applicants under the Insolvency and Bankruptcy Code, bringing in more clarity and transparency in the insolvency resolution process.
The amended rules for the insolvency resolution process for corporate persons have made it mandatory for resolution professionals to ascertain “fair value” of the corporate debtor besides the liquidation value.
This will enable banks to ascertain the market price of the distressed company. Earlier, the banks only had the usually much lower liquidation value as a guidepost before starting the resolution process.
As per the rules, the committee of credito…