IBC resolutions and haircuts
What should be the yardstick to evaluate haircuts in IBC Recovery versus Total Admitted claims - a fallacy: Recently, one of the largest bank employees' union in India, came out with a list of business firms, said to have been acquired by a business conglomerate through resolutions/liquidation effected under IBC (Insolvency and Bankruptcy Code), with a statement that the business group is the beneficiary at the cost of the banks concerned (average haircut 74%). While the fight against huge haircuts in the banking books (in the resolution process under IBC) by the bank employees' union is understandable, I did not subscribe to the view that was being impressed upon (in their circular) that the process was done in order to help one particular beneficiary. Right from the beginning, the resolutions done through IBC witnessed haircuts ranging from 40 to 80% and the said list, at best, is only an affirmation to the general trend since the beginning of the...
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