IBBI ANNOUNCES CENTRALIZED ELECTRONIC AUCTION PLATFORM FOR LIQUIDATION ASSETS
In a significant advancement for the insolvency framework in India, the Insolvency and Bankruptcy Board of India (IBBI) has issued a circular (No. IBBI/LIQ/78/2024) on October 29, 2024, detailing the implementation of a centralized electronic platform for the sale of assets undergoing liquidation processes. This initiative aims to enhance transparency, streamline operations, and improve recovery rates for creditors, addressing longstanding issues within the current system.
Background and Purpose
According to Regulation 33(1) of the IBBI (Liquidation Process) Regulations, 2016, liquidators are mandated to sell the assets of corporate debtors through auctions as specified in Schedule I. However, the current practice allows liquidators to utilize various auction platforms, often leading to limited public access to asset details until the auction notice is issued. This creates information asymmetry, restricting potential buyers’ ability to adequately assess asset values, which ultimately results in lower recovery rates for creditors.
To tackle these challenges, the IBBI has partnered with the Indian Banks’ Association (IBA) to launch the eBKray platform, which is managed by PSB Alliance Private Limited—a consortium of 12 public sector banks. Over the past five years, eBKray has successfully conducted auctions for assets mortgaged to public sector banks under the SARFAESI Act.
Features of the eBKray Platform
The eBKray platform is designed to be a comprehensive, centralized listing and auction platform for all assets under the IBC liquidation process. Key features include:
- Detailed Asset Information: The platform will provide extensive information about corporate debtor assets, including photographs, videos, geographical coordinates, and the status of any liens or attachments.
- Continuous Public Access: Unlike the current system where asset details are only available at the time of auction notices, eBKray will ensure that information is continuously available to the public, allowing potential buyers ample time to evaluate assets before bidding.
- User-Friendly Interface: The platform will be accessible to Insolvency Professionals (IPs) and prospective buyers, facilitating easier participation in the auction process.
Implementation Timeline
The eBKray platform will initially launch in pilot mode, with the full rollout scheduled for a later date following improvements based on user feedback. Liquidators are required to list all unsold assets from ongoing liquidation processes on the eBKray platform within seven days of submitting the asset memorandum to the Adjudicating Authority. Furthermore, they may begin using the eBKray auction platform for asset sales immediately upon the circular’s enactment.
The circular will take effect on November 1, 2024, marking a pivotal moment for insolvency proceedings in India. It aims to foster greater bidder participation, enhance price discovery, and maximize returns for creditors.
The introduction of the centralized electronic auction platform represents a crucial step forward in reforming the insolvency process in India. By leveraging technology to create a more transparent and efficient marketplace for liquidation assets, the IBBI hopes to improve outcomes for both creditors and bidders. As stakeholders prepare for this new framework, the initiative is expected to reshape the landscape of asset liquidation, ultimately leading to higher recovery rates and a more robust insolvency regime in the country.
