The Insolvency and Bankruptcy Board of India (IBBI) has allowed the part sale of assets of a company undergoing insolvency resolution. This move is aimed at fetching better value for stressed assets and maximising recovery.

In the amended regulations, the administrators and creditors of bankrupt firms can invite bids for individual assets of the company if they don’t receive any resolution plan for the entity as a whole.

The amendments to regulations on ‘Insolvency Resolution Process for Corporate Persons’, issued on 16 September,  enables the resolution professional and the committee of creditors to issue request for resolution plan a second time for sale of one or more of assets of the corporate debtor in cases where no resolution plan has been received for the corporate debtor as a whole.

The IBBI said it has amended the regulations with the objective “to maximise value in resolution”.  

“It enables for a resolution plan to include sale of one or more assets of the debtor company to one or more successful resolution applicants submitting resolution plans for such assets and providing for appropriate treatment of the remaining assets," IBBI said in a statement.

The amendment provides for formulating a strategy for marketing of assets of the bankrupt business to a wider and targeted audience of potential bidders.

It also enables a longer time for the asset to be in the market, as the invitation for expression of interest has now been advanced to 60th day from insolvency commencement date. Changes have also been introduced to provide more relevant information to persons for expressing interest, IBBI said.

In order to reduce delays in the resolution process, creditors can examine whether they want to explore the option of ‘compromise or arrangement’ — a restructure option under the Companies Act. They can seek this option from the tribunal while applying for a liquidation order.