IBBI Asks Liquidators To List Asset Details On Centralized e-Auction Platform

(The Corner Office Journal) -- The Insolvency & Bankruptcy Board of India (IBBI) asked insolvency professionals to list all assets being sold in liquidation cases on a centralized electronic platform, eBKray, to maximize liquidation value and improve creditor recovery.

Currently, the liquidators in the various liquidation process are selling the assets through various auction platforms and the details of a company's assets are typically made public only at the time of the auction notice, the IBBI said in circular on 29 October.

This practice leads to information asymmetry, as potential buyers have limited time to assess the value of the assets, often resulting in lower recovery rates, it added.

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

Addressing Challenges

The insolvency regulator said it has partnered with the Indian Banks’ Association (IBA) to facilitate the auction of assets through the eBKray platform to address these challenges.

The eBKray platform is presently owned and managed by PSB Alliance Private Ltd., a consortium of 12 public sector banks. The platform has been conducting auctions for assets mortgaged to public sector banks under the SARFAESI Act for the past five years.

The regulator said PSB Alliance has developed a module within the eBKray platform to facilitate the listing and auction of assets under the Insolvency & Bankruptcy Code (IBC). This centralized platform offers detailed information on corporate debtor assets, including photographs, videos, and geographical coordinates, it added.

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

The regulator said the liquidators will have to list all assets of the corporate debtor as mentioned in the asset memorandum, including comprehensive details such as the status of the attachment or lien, geographical coordinates, and the likely date of auction.

A total of 2,547 companies across sectors were brought into liquidation until end-June 2024, according to the IBBI's latest data. The number of ongoing liquidation process stood at 1,475 as of 30 June 2024.

Some of the major companies facing liquidation include Kishore Biyani-promoted Future Retail Ltd. and Essar Group companies EPC Constructions India Ltd. and Essar Power (Jharkhand) Ltd.

New Mandate Effective Date

The IBBI directed the insolvency professionals handling the liquidation processes to:

=> List the details of all the unsold assets in respect of ongoing liquidation processes on the eBKray platform.

=> List all the assets within seven days of submission of asset memorandum to the adjudicating authority in respect of liquidation processes commencing on or after this circular

=> Use the eBKray auction platform for sale of assets in respect of all ongoing cases

The regulator said the circular will be effective from 1 November. The platform will be rolled out on a pilot basis initially, with a full launch planned after incorporating feedback from early users, it added.

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