India’s insolvency body proposes rule changes
India’s insolvency watchdog is seeking public comment on proposed change to the insolvency rules to make the process more streamlined and cost-effective.
The Insolvency and Bankruptcy Board of India (IBBI) has proposed amendments to the Insolvency Resolution Process for Corporate Process regulations, and is asking for stakeholder comment by July 10.
These amendments are expected to enhance the efficiency and transparency of the Corporate Insolvency Resolution Process (CIRP), and benefiting creditors and other stakeholders involved in the CIRP.
In a discussion paper, the IBBI proposes that the registered valuer should submit a comprehensive valuation report for the corporate debtor as a whole, rather than separate valuations for different asset classes.
This proposal seeks to eliminate inconsistencies between the CIRP regulations and the Companies (Registered Valuers and Valuation) Rules.
For companies with an asset size of up to Rs 1,000 crore (£95,000) and micro, small and medium enterprises (MSMEs), the board proposes to appoint only one registered valuer for providing the estimates of the fair value and the liquidation value.
This measure will reduce CIRP costs and expediting the process for small entities.
The IBBI – a statutory body overseen by the Ministry of Corporate Affairs – has invited stakeholders, including corporate debtors, creditors, insolvency professionals and the general public, to submit their comments on the proposed amendments by July 10.
To prevent delays in the appointment of authorised representatives (AR) for creditors, the IBBI, also proposed to allow the interim resolution professional to enable the AR to participate in the Committee of Creditors meetings immediately after an application for their appointment is submitted to the adjudicating authority.
The discussion paper also addressed the issue of release of guarantees in the resolution plan; the board proposes that such a proposal submitted by the applicant will not extinguish the rights of creditors to proceed against guarantors and enforce realisation of guarantees governed through various agreements.
Manufacturing/service sectors boost economic performance
Business activity continued to grow in June thanks to the strength of the manufacturing and service sectors, according to a new survey by HSBC Holdings. The survey also revealed that job creation was at an 18-year high.
The HSBC flash India Composite Purchasing Managers’ Index saw an upward adjustment to 60.9 in June, compared with 60.5 last month. The index, compiled by S&P Global, measures the month-on-month change in the combined output of India’s manufacturing and service sectors.
The manufacturing sector witnessed a sharp increase in growth, as HSBC flash India Manufacturing PMI increased from 57.5 in May to 58.5 in June. The HSBC flash India Service PMI business activity index also grew to 60.4 this month, in contrast to 60.2 in May.
Any Index score of under 50 represents contraction in output, while a score above 50 indicates growth.
“New orders gained growth momentum for both sectors, with a faster upturn among manufacturers,” said Maitreyi Das, Global Economist at HSBC.
New export orders increased for the 22nd consecutive month in June, with growth coming from Africa, Asia, Australia, the Americas, Europe and the Middle East. The rate of expansion was the second fastest it had been since the Index started in September 2014.
The robust increase in demand pushed the firms to hire more people, with the rate of employment generation being the highest in 18 years.
Driven by positive demand trends, manufacturers purchased additional inputs for use in the production process. The survey found that the rate in buying levels was quicker than in May.
“Input cost inflation eased slightly in June, but remained elevated with panellists citing increases in labour and material costs. The output price index suggests manufacturing firms were able to pass on higher costs to customers. Overall, optimism about future output weakened in June, but remained above the historical average,” said Das.
