IBBI (Insolvency & Bankruptcy Board of India) has issued IBBI regulation, 2018 which will come into force on 1 April 2018. IBBI changed the liquidation process through this regulation. Now, it allows liquidator to sell the corporate debtor as a going concern.
Where the corporate insolvency resolution process (CIRP) has failed then liquidator of company sells the assets of the company as a going concern rather than disposing of through four other methods of selling the assets of the company.
Through an amendment, a fifth method has added that is “as a going concern “for selling the assets of the corporate debtor. Before the amendment, there were four methods for the liquidation of a corporate debtor –
- Disposal of its assets, namely, sale on a stand-alone basis.
- Slum sale
- Sale the assets in parcels
- Sell the assets collectively
If assets of the company sold by the method as a going concern, it will more benefit than their scrap value. It helps to protect the interest of stakeholders benefit.