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Bankers clear Ebix resolution plan for Educomp

ANI  |  New Delhi [India] 

A 27-member (COC) consisting of 24 Solutions Limited (ESL) banks and lenders and three lenders of its subsidiary (ESSPL) has recently cleared a proposal for the sale of ESL to Nasdaq-listed Ebix Inc., a in insurance and and exchanges.

has reportedly earmarked USD 300 million for investments in India, including acquiring companies in the digital learning and remittance space, and after various discussions by COC members on resolution plans and evaluation criteria for close to a year, the resolution plan submitted by was approved

A new law on insolvency and resolution process has facilitated this transfer of ownership and

"The purpose of IBC (Insolvency and Bankruptcy Code) is to revive companies like Educomp, Essar Steel, etc. which have a fundamentally strong model but a stressed balance sheet by bringing in a new management with strong balance sheets. This is the only way to revive these vital sectors of the economy. What is important is that the process has produced a highest bidder which complies with the processes and standards of the IBC, including stringent checks on the connected party issue which were conducted by M/s Kroll," one of the bankers involved in the resolution process said on condition of anonymity.

He maintained that it has been one of the best run processes so far, with the COC supervising every stage of the resolution process under the watch of the Resolution Professional and process

A was carried out as per existing IBC norms and barring a few technical issues, Educomp's resolution and operational handover process was found to be satisfactory.

The also mentioned that carried out a forensic audit on the company and did not come up with any adverse findings.

Mahender Khandelwal, Educomp's insolvency resolution professional, clarified several aspects of the resolution process, including aspects such as conflict of interest.

The CoC has said it has examined all agreements between the two parties.

The detailed under the provisions of the IBC was conducted by the BDO over a period of three years. All issues were addressed, discussed and the CoC voted in favour of the resolution.

said, "It is an accepted fact that has gone into insolvency because of delinquent customers over the years and over 5000 arbitration cases are currently being fought by the company against schools across the country. As such, necessary statutory provisions have been made in the financial accounts."

It may be recalled that the had last year approved an ordinance to introduce certain changes to the Insolvency and Bankruptcy Code (IBC).

It was stated then the proposed changes in the IBC were being done to rationalise the process of selecting buyers for stressed assets. It was decided to introduce the provisions with a view to improve the quality of insolvency resolution.

The provisions briefly included (1) Prescribing eligibility criteria with respect to prospective resolution applicants (2) Inserting a new section to lay down a comprehensive criteria with respect to persons ineligible to be resolution applicants (3) Providing a robust due diligence framework to enable the (COC) to make proper assessment of credit worthiness and other relevant parameters of the applicant as may be prescribed by the Board, before approving a resolution plan.

The changes in the IBC were aimed at giving companies a chance to revive, bring in fresh capital into the country, save jobs and reduce the backlog of non-performing assets.

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Wed, April 25 2018. 10:30 IST