IBBI moots IT platforms to help insolvency professionals work efficiently
The Insolvency and Bankruptcy Board of India (IBBI) is now planning IT platforms – Platforms for Distressed Assets (PDAs) – for insolvency professionals to seek interim finance, invite resolution plans, do auction during liquidation, etc on the platforms. The aim is to help the insolvency professionals discharge their responsibilities more efficiently.
The plan is to have multiple third-party IT platforms, which insolvency professionals can leverage to improve their performance and compliance. The insolvency regulator has called for application from technology companies with 5 years or more of existence and with profitable operations in last three financial years for empanelment as PDAs.
Functions of PDAs
IBBI lists out four main functions of these IT platforms – market place for Interim Finance, virtual data room for invitation of resolution plans/Liquidation, invitation and evaluation of resolution plans and auction during liquidation.
The insolvency professionals are required under the insolvency law to take charge of the company under insolvency and run its operations during the insolvency period. Therefore, the insolvency professional requires interim finance to run the company as going concern. The IT platform is required provide a market service where willing and interested parties place demand and supply proposals. The objective is to give the insolvency professional access to low-cost funding.
The IT Platform should offer Virtual Data Room facility for information dissemination on need to know basis so that interested investors and bidders can access all the information about the corporate debtor whether in the resolution period or at the time of liquidation.
“The strategic investor would need certain important business information before it can commit itself into the process. On the other hand, disclosure of such information in public domain would jeopardise the corporate debtor. An IT-based virtual data room is therefore required, where the resolution professional/liquidator can post business and/or asset information, which is accessible on need to know basis with assess control. An audit trail of uploaded data and access is required to be maintained,” says a note issued by IBBI inviting applications for empanelment of IT Platforms.
The IBBI also sees these IT Platforms as a transparent medium for inviting a larger number of interested parties as resolution applicants, who should be able to raise queries from the resolution professional through the IT Platform. They can also ask for more time for submission of resolution plan as well as make changes in their resolution plan on the platform itself.
The platform should also facilitate sale of assets of corporate debtor during the liquidation phase. The IT platforms can also other services outside the scope of IBC.
The insolvency regulator would neither provide any seed money to the prospective IT platform nor decide the fee they can charge for their services. It will all be driven by market forces.
