The ministry of corporate affairs will soon notify regulations on last possible measures for revival of companies that have been ordered for liquidation through the insolvency process.
“Once the liquidation order is given, the liquidator has to explore Section 230 of the Companies Act first. We are working on the regulation on how this will be done and the process that will be followed,” a senior official aware of the developments said.
This follows a recent order by the National Company Law Appellate Tribunal, in which it directed the liquidator to exhaust options available under this section before proceeding to attempt to sell the company wholly or in parts.
Section 230 of the Act allows creditors to make arrangements with the members of the company to restructure debt liabilities.
The official said compromise should be another option for exit before liquidation, with a view to reduce destruction of value.
It is not clear if this would mean that promoters who are otherwise prevented from bidding for distressed assets under Section 29(A) of the Insolvency and Bankruptcy Code would be able to regain control of their companies if a liquidation order has been passed.
Source : PTI