Focus on maximising value, not who bids

 

Focus on maximising value, not who bids

The changes to the Insolvency(दिवाला/शोधाक्षमता) and Bankruptcy(दिवालियापन) Code to ease entry barrier(प्रतिबंध/अवरोध) for promoters of companies that are in the insolvency row are welcome. The idea is to create a more conducive(अनुकूल/सहायक) regulatory framework for speedy resolution(प्रस्ताव/समाधान) of corporate distress(विपत्ति). But there is a glitch(गड़बड़). The amendments(संशोधन/सुधार), to be cleared by Parliament, are prospective(भावी/प्रत्याशित) , and will not apply to resolution processes already underway. Except in the case of those that have been completed, there is every reason to make amendments in the law and regulations apply to all resolution processes for the very reason that has prompted(प्रेरित करना/उत्साह देना) the government to bring the amendment in the first place: broaden(व्यापक/फैलना) participation in the bidding(बोली लगाना) for resolution assets(संपत्ति) and maximise the realisation(वसूली/प्राप्ति) by lenders(उधारदाताओं). Only wilful defaulters(बकाएदारों) need be kept out. Also, the reasoning that promoters who have ‘run their businesses’ into the ground must be penalised(सज़ा देना
/दंड देना) does not take into account things like policy changes or failure to implement policy, as in the power sector, where 30% of the power that is produced is not paid for, bankrupting utilities(उपयोगिताओं/लाभ), which result in the project losing viability(व्यवहार्यता/जीवन क्षमता). 

The stress should be on widening(चौड़ा करना) participation in the resolution process, not on excluding(छोड़कर) promoters who have not been wilful defaulters. This principle would go against the provision(प्रावधान/नियम) disqualifying promoters whose loan accounts have been classified as non-performing assets (NPA) for more than a year. Policy must create a competitive(प्रतियोगी) market for distressed(अस्वस्थ/तंग) assets to broaden participation. Healthy competition in bidding will help maximise the realisation from selling off the assets of bankrupt entities(संस्थाओं), minimise the haircut that banks have to take, lower the load on the exchequer(खजाना/सरकारी खजाना)for recapitalising(पूंजीकरण फिर से) public sector banks and lower the burden on the taxpayer.

 

 

Important Vocabulary

 

1.Resolution(प्रस्ताव/समाधान)
Synonyms: decision, settlement, verdict, aim, boldness
Antonyms: indecision, apathy, cowardice, fea, flexibility

2.Amendments(संशोधन/सुधार),
Synonyms: change, modification, reform, remedy, revision
Antonyms: damage, harm, hurt, injury, worsening

3.Broaden(व्यापक/फैलना)
Synonyms: augment, develop, enlarge, expand, increase
Antonyms: abridge, compress, decrease, diminish, lessen

4.Distressed(अस्वस्थ/तंग
Synonyms: afflicted, agitated, anxious, distraught, jittery
Antonyms: calm, cool, happy, peaceful, pleased

5.Defaulters(बकाएदारों)
Synonyms: borrower, defaulter, account, bankrupt, deadbeat
Antonyms: creditor, lender, mortgagee

6.Viability(व्यवहार्यता/जीवन क्षमता).
Synonyms: activity, growth, heart, soul, being
Antonyms: abstract, apathy, dullness, idleness, inactivity

Print Friendly, PDF & Email