Having debarred wilful defaulters from insolvency resolution process, the government expects heightened interest of foreign investors in stressed domestic companies under insolvency resolution, but it would ensure these firms indeed have the credentials to bid for the assets. The idea is to offset any perceived undue advantage to bidders from other countries, where the concept of wilful defaulter doesn’t exist, vis-à-vis domestic ones, a senior government official told FE. Another official said even if a foreign country doesn’t have the concept of wilful defaulter, it will still have enough checks and balances in place which a local company there is mandated to follow. If a foreign company is duly complying with the law of the land there, he said, there is no reason why it should not get the chance to bid for stressed companies here if it fulfils the stipulated criteria. “In fact, their participation will only improve competition to acquire assets,” he added. However, if a foreign country does have the concept of wilful defaulters, bidders from that nation may be asked to submit certificates citing bona-fides, he said.
“The perception that domestic bidders could be discriminated against vis-à-vis foreign ones, especially from those countries where there is no concept of wilful defaulters, is not based on logic. Even then, all necessary steps will be taken to ensure the insolvency resolution eco-system moves in a transparent, professional and non-discriminatory manner,” said the first official quoted above. The insolvency professionals and the committee of creditors are best equipped to ensure any foreign company that bids for stressed firms comply with the “spirit of the law”, that is preventing unscrupulous and dubious elements from bidding for stressed assets, he said.