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Chapter 49: Re-Designing The Insolvency Auction to Optimize Value
Re-Designing The Insolvency Auction to Optimize Value
The IBC 2016 seeks to recover value from NPAs through an auction conducted by creditors in which entities are required to submit a bid for the assets of the failed company and indicate a resolution plan. Here, suggestions are offered on how the auction process of the IBC could be re-designed to generate more value for the creditors.90
Free entry and free exit of firms are the hallmarks of a competitive market. While the ending of the license-permit raj in the 1990s was a significant shot in the arm of free entry, it is only the recently enacted IBC that has created the prospect of reduced barriers to exit. The successful bid ...