Indian entrepreneur Sajjan Jindal has called for existing promoters who are not willful defaulters to be allowed in the management of companies undergoing insolvency proceedings.
Taking to micro-blogging website Twitter yet again, the Chairman and Managing Director of JSW Group told Finance Minister Arun Jaitley, “Existing promoters are allowed to be in management in non-NCLT cases with deep debt restructuring involving large haircuts if they are not wilful & non-cooperative borrowers. If so,why to differentiate in #NCLT cases to debar legitimate promoters in bidding process? @arunjaitley.”
The steel tycoon has been most active in showing his interest in bidding to buy the assets undergoing insolvency.
Further, in another tweet, marking the Prime Minister’s office and the Finance Ministry, he posted, “Uniform evaluation criteria should be specified upfront for all stressed cases under #NCLT. This will bring transparency to bid evaluation process and will help avoid litigations. @arunjaitley @FinMinIndia @PMOIndia.”
Under the current resolution norms given by the Reserve Bank of India, while the non-performing assets (NPAs) are being resolved under its various mechanisms including SDR (strategic debt restructuring) and S4A (scheme for sustainable structuring of stressed assets), the management of the company undergoing the resolution retails management. However the promoters lose control as banks convert debt into equity under SDR.
However, as per the rules under Insolvency and Bankruptcy Code (IBC), the moment a company is admitted with the NCLT (National Company Law Tribunal), a resolution professional takes charge and control of the company’s management.
Recently, the government also amended a few rules of the IBC to bar promoters including willful defaulters of existing companies to bid for the assets once they are up for sale while undergoing the insolvency process.
Jindal has been consistently posting his views on social media relating to the many rules that require tweaking in order to increase “transparency and prevent misuse of IBC”.
In November, he tweeted, “Dubious promoters should not be allowed to submit the rehabilitation plan to prevent misuse of the IBC. Also the bidding criteria should be spelt out explicitly prior to inviting the bids. This will avoid likely litigation #NCLT @FinMinIndia@rsprasad @arunjaitley@PMOIndia.”
Previously, he also pointed out that, "The listed company shares in the event of reference to #NCLT should be suspended as per global practice to avoid speculation in the market."Also Read: Sajjan Jindal tweets against allowing 'dubious' promoters to bid for assets under insolvency process