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Only `clean’ cos allowed to bid for stressed assets Courtesy : The Times of India

The Insolvency and Bankruptcy Board of India tightened the rules on Tuesday , mandating stringent scrutiny to check antecedents of the bidders, including their credit worthiness, in a move that is seen to be ensuring that promoters of debt-laden companies do not manage to walk away with an entity with a lighter burden.

The move comes at a time when there is a raging debate over allowing promoters of companies facing bankruptcy to bid for the companies, which are grappling with financial stress due to inability or reluctance of the owners to act swiftly and repay debt on time.

“IBBI has amended its corporate insolvency resolution process regulations to ensure that as part of due diligence prior to approval of a resolution plan, the antecedents, credit worthiness and credibility of a resolution applicant, including promoters, are taken into account by the committee of creditors,“ an official release said. Under the Insolvency & Bankruptcy (IBC), the government has put in place a fast-track mechanism to ensure that a decision on companies that can be revived is taken within 180 days and the management is handed over to an resolution professional (IRP) appointed by the National Company Law Tribunal.The resolution period can be extended by 90 days and if a plan cannot be worked out then the company will go into liquidation. “It is part of the process to ensure that the resolution plan is viable,“ explained a government officer.

The new regulations are aimed to prescribe that the resolution plan presented to the committee of creditors includes details to assess the credibility of the applicants. The details that need to be shared should include the applicant’s terms of convictions, disqualifications, criminal proceedings, categorisation as wilful defaulter, debarment by Sebi, if any, and transaction, if any, with the company over the last two years. The last element is aimed at ensuring that entities which have strong ties with the promoters, or are related parties, do not end up acquiring control.

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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.