As per the Insolvency and Bankruptcy Code, 2016, the liquidation process must be completed within the statutory time limit of one year, so that the claims of the stakeholders can be settled in time. However, in every liquidation process there are some assets that are difficult to sell because of their costs, lack of interested buyers or some other reasons such as they cannot be converted into cash easily within a fixed time frame. These assets are called as illiquid assets. Illiquid assets are one of the main reasons of delaying liquidation due to non-completion, as the liquidator in unable, a lot of times, to liquidate each and every asset of the Corporate Debtor.
The Insolvency and Bankruptcy Board of India (IBBI), the regulator body is concerned that delay in liquidation process can reduce the realisable value of assets of the Corporate Debtor. The IBBI proposed the following solution to face such frequent problems:
1) The Liquidators must be allowed to assign the beneficial interest in these assets to third party.
2) Financial Creditors too, must be allowed to transfer their debt during the liquidation process without awaiting the final sale.
One one hand, these steps will certainly ensure that winding up or liquidation process would not kill the assets of a Corporate Debtor, and on the other hand these would be helpful in concluding the liquidation process promptly and thereby enabling the possibility of stakeholders' settlement within time frame.
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