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Insolvency ordinance may see 100-150 cases reopen Courtesy :

Bidders Need To Declare No Violation Of Any New Clause
The ordinance to make several companies as well as some promoters ineligible to bid for ailing companies may result into reopening of 100-150 cases with insolvency professionals beginning to dispatch letters to bidders to disclose if they are facing action in various forums.

“Insolvency professionals are asking bidders to declare that they do not violate any of the provisions that have been inserted. So far, they only had to check if the resolution process was in order or not but now they have to also verify if bidders are eligible on all counts,” a lawyer working on several cases told TOI.

Sources said the biggest impact will be on companies where the resolution plan has been finalised and is awaiting a go ahead from the National Company Law Tribunal (NCLT). “In these cases you will have to do the eligibility check, which means that the process will get extended and in some cases may be delayed,” a source said.

The Insolvency & Bankruptcy Board of India (IBBI), too, has written to the insolvency professionals seeking a host of details on bidders — ranging from subsidiaries and associates of the ailing company, related party transactions, details of forensic audit, apart from details of criminal cases against directors, history of BIFR and loan restructuring under some of the RBI schemes. Besides, it wants to know if the management has been cooperating during the insolvency process or not.

Since the Insolvency & Bankruptcy Code was enacted last year, over 300 cases have been filed with the NCLT with many of them coming from the lenders, while other creditors have also taken the route to recover dues. Once a plea is admitted, NCLT appoints an insolvency professional who takes charge of the company. The law provides for a time-bound resolution within 180 days, which can be extended by another 90 days, and companies where there is not enough interest are sent for liquidation.

A break-up of cases in various stages is not readily available but sources said many of them are nearing or past the halfway mark. But finalising bids is a time-consuming process that starts from issuance of an information memorandum, seeking interest from potential bidders, nondisclosure agreements with them, giving access to data, before calling the bids and then finalising the winner. Between all this the insolvency professional seeks clearances from the committee of creditors, which oversees the running of the company.

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During my 37-year-old career with Income Tax department, I moved from place to place, post to post. For me, every posting was a challenge, and at the same time an opportunity to deliver.

After my retirement as Chairman of Central Board of Direct Taxes, I was invited by various institutions and NGOs to deliver talks on tax matters. While advising taxpayers across sectors, I noticed, our vast salaried class including armed and paramilitary forces, pensioners or senior citizens, NRIs, professionals and small business establishments need the right guidance. Most taxpayers do comply with their tax obligations fully. Yet, they are not somehow relaxed and are burdened with anxieties. A large number of taxpayers are not even aware that getting tax refund on time is a basic right.

In one such meeting, a middle-aged man quizzed me why could not I give tax advice 24X7. For a moment, I had no answer. He then added that I should give tax solutions online so that he does not need to come from a remote place to attend my lecture. I thanked him for his suggestion.

For a while I was restless. Already I had got myself enrolled as a Member of the Bar Council of Delhi and as an Advocate of Delhi High Court Bar Association, thanks to my law degree from the University of Allahabad. Yet, I was not sure how I could help the vast majority of taxpayers who somehow maintain a safe distance from the taxmen. I then tossed the idea of creating a tax think-tank with some of my former colleagues and highly spirited individuals. All of us immediately agreed on one count: millions of Indian taxpayers expect to access tailor-made tax research materials and seek guidance from those who have been parts of the tax machinery for decades.

That is how CTAR was born. So, be a part of our passionate journey to explain tax laws and rules in simpler words. Just drop us a few lines on any query related to direct and indirect tax or FEMA. We are at your assistance. We also look forward to hearing your experiences while dealing with the system.