IBBI, IBA to launch centralised platform for asset liquidation auctions

Initially, the platform will be deployed in pilot mode, with a full rollout planned at a later date after incorporating improvements based on usage feedback

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Assets undergoing liquidation through the Insolvency and Bankruptcy Code (IBC) will soon be available to potential buyers under a centralised platform for listing and auction as the regulatory body overseeing insolvency proceedings has collaborated with the Indian Banks of Association (IBA) to facilitate the auction under one umbrella, a circular issued by the Insolvency and Bankruptcy Board of India (IBBI) said.

 

The auction of assets would be carried out through the eBKray platform. Owned and managed by PSB Alliance Private Limited - a consortium of 12 public sector banks, eBKray has been conducting auctions for assets mortgaged to public sector banks under the SARFAESI Act for the past five years.

 

Initially, the platform will be deployed on a pilot mode. A full-fledged roll out will happen at a later date after making improvements based on usage experience. The IBBI circular would come into force with effect from November 1, 2024, IBBI said.

 

The insolvency regulator said that the PSB Alliance has developed a module within the eBKray platform to facilitate the listing and auction of assets under IBC.

 

“By enhancing transparency and efficiency through advanced technology, eBKray aims to increase bidder participation, streamline operations, and maximise returns for creditors while improving outcomes for bidders,” the IBBI circular said.

 

As a single-listing platform to host all assets being sold in liquidation cases, it will require all details including the status of the attachment or lien, geographical coordinates, and the likely date of auction to be provided by the liquidators, the regulator said.

 

Currently, the liquidators in the various liquidation processes sell the assets through various auction platforms. Details of a company's assets are made public only at the time of the auction notice. This, IBBI said, leads to information asymmetry, as potential buyers have limited time to assess the value of the assets, often resulting in lower recovery rates.

 

“A centralised listing and auction platform where details of all assets under liquidation of the corporate debtor are continuously available to the public, provides an effective solution to these problems,” IBBI said.

 

Experts said that the new guidelines were a long-awaited reform for the Code, still evolving and beset with undue delays and inadequate recovery leading to heavy haircuts.

 

“It will lead to a wider market for prospective buyers and also ensure better price discovery and higher levels of recovery. The proposed mechanism has already been tried and tested under the operation of IBA and is expected to bring better transparency and clarity,” said Jyoti Prakash Gadia- managing director at Resurgent India- A Sebi Registered Category 1 merchant bank.