Letters: Not viable

With reference to “Nearly 70% of stressed SMEs face liquidation” (November 3O), SMEs, which contribute almost 40 per cent to our GDP, such a news is really alarming. We all know that the latest changes in the Insolvency and Bankruptcy code has literally removed promoters from the bidding process of stressed assets, and since these SMEs do not generally garner interest from third party, it would be really impossible to save these companies from liquidation now. After the recent changes in the law, even promoters with serious intent to revive their company will have to face the heat and let go of their business. Now coming to the point where such SMEs will prefer S4A over IBC, even S4A will not be very easy as creditors may be wary of turning their debt into equity as it is not a viable proposition for them. It is only when these stressed projects or companies turn profitable again that banks will be able to liquidate their equity. Otherwise, it is just a fruitless exercise. Of course, these smaller companies will not have as strong a management team as their other bigger counterparts in the corporate sector, but they should not be penalised because of this. So, in a nutshell, the Insolvency Ordinance needs to be  reconsidered to for the larger benefit of the economy.    Bal Govind Noida

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