Steps taken by IBBI to strengthen liquidation process
The Insolvency and Bankruptcy Board of India (IBBI) has introduced significant reforms to enhance liquidation outcomes under the Insolvency and Bankruptcy Code (IBC). With more companies being successfully resolved and a decline in liquidations, the regulator is focusing on improving realisation for claimants and streamlining the liquidation process.
IBBI Chairman Ravi Mital, in the board’s quarterly newsletter, highlighted a major shift in the liquidation trends under the IBC. In 2017-18, for every company (Corporate Debtor or CD) resolved, five entered liquidation. However, by 2024-25, this ratio has improved significantly, with only 1.3 companies going into liquidation per resolution.
While the trend is encouraging, concerns remain about poor realisations for claimants in such cases, sometimes even falling below liquidation value. In response, IBBI has been consistently amending Liquidation Process Regulations to make the process more efficient, transparent, and beneficial for stakeholders.
A key reform has been the expansion of the Stakeholders Consultation Committee’s (SCC) role. Liquidators are now required to hold SCC meetings at least once every quarter, ensuring oversight and timely decision-making. Consultation with the SCC is now mandatory for major liquidation actions, including marketing strategies for asset sales, fresh valuations, legal proceedings, and managing the corporate debtor as a going concern.
To safeguard homebuyers, IBBI has mandated the exclusion of already allotted housing units from a liquidated estate. This ensures that homebuyers with possession rights are protected even if a developer undergoes liquidation.
Another major challenge in the liquidation process has been the fragmented nature of asset sales. Different liquidators use varied online platforms, and inadequate advertising often leads to inefficient information dissemination, affecting price discovery and competitive bidding. To address this, IBBI has partnered with the Indian Banks’ Association to launch BAANKNET (Bank Asset Auction Network), a centralised e-auction platform.
BAANKNET, managed by PSB Alliance Private Limited, is widely used for auctions under the SARFAESI Act. As of January 27, 2025, it has facilitated over 63,019 auctions for assets worth ₹5,356.49 crore, with 9,609 more auctions scheduled. Encouraged by its success, IBBI has now mandated its exclusive use for IBC-related liquidation auctions starting 1 April 2025.
With robust KYC mechanisms, advanced digital marketing, automated refunds, and audit trails, BAANKNET is expected to enhance transparency, improve price realisation, and ensure greater efficiency.
This digital shift could set the stage for a future platform to invite resolution plans under the IBC, ensuring more competitive bidding and value maximisation for creditors. With the government’s plan to develop an Integrated Technology Platform for the IBC ecosystem, the IBBI remains committed to technological innovation and process reforms.
Also Read: IBBI proposes end to ‘Going Concern’ sales in liquidation for faster resolutions
