IBC Process - New Challenges as some winners look to wriggle out
By INSOL India - Editorial Team Posted On : June 01, 2020
Resolutions under the IBC may face a difficult time after the pandemic of COVID-19 as bankers fear that winning bidders will review their interest in companies undergoing CIRP and may attempt to re-negotiate bids or pull out altogether.
Bankers also fear that winning bidders may invoke the force majeure or material adverse effect clauses in approved resolution plans to wriggle out of deals or renegotiate the sale price of such companies undergoing CIRP on the basis of COVID-19.
Lenders also fear that bidders of stressed assets will lose interest in such assets post COVID-19 and utilize such waning interest to their advantage in negotiations. This waning interest also allows erstwhile promoters of such companies to re-negotiate settlements.
Bankers also fear that winning bidders may invoke the force majeure or material adverse effect clauses in approved resolution plans to wriggle out of deals or renegotiate the sale price of such companies undergoing CIRP on the basis of COVID-19.
Lenders also fear that bidders of stressed assets will lose interest in such assets post COVID-19 and utilize such waning interest to their advantage in negotiations. This waning interest also allows erstwhile promoters of such companies to re-negotiate settlements.