Insolvency: Bidders may not be able to sell stressed assets for 5 years

Banks, expected to take haircuts of 60% at least on their loans, want to protect their interest even after a new owner comes in

Bidders for assets of companies undergoing insolvency proceedings face up to a five-year lock-in for the shares they acquire. Lending banks are insisting on this to deter sales of the assets by the new promoter at a profit within months of the takeover. 

“It is a good strategy that the applicant’s shares held in the restructured company be locked in for a reasonable period of time. This will provide comfort to creditors who have agreed to take a haircut in an attempt to revive the struggling company,” said Sumit Binani, a resolution professional.

According to a source close to the