Promoters can take part in liquidation process if lenders okay IBC exit

Fate of several companies is hanging in the balance as defaulting promoters approach the NCLT to settle dues with creditors

Promoters can take part in liquidation process once their companies are out of the purview of the Insolvency and Bankruptcy Code (IBC), a senior government official told Business Standard. 

Section 29A of the IBC does not allow non-performing asset (NPA) holders, including promoters, to take part in the resolution process. However, taking creditors on board, even defaulting promoters can enter into settlement of dues under Section 230 of Companies Act. Section 230 of the Companies Act gives promoters’ power to make arrangements with creditors and other members. Such a provision would, however, apply only after the company’s insolvency resolution application has