The ongoing uncertainty in the Amtek Auto insolvency case after the 'successful' bidder Liberty House failed to pay creditors is a 'learning' experience for the entire insolvency regime. After Liberty House failed to pay banks as promised, the creditors' committee has now begun looking for fresh bidders for Amtek.
While this means start of the insolvency process from scratch, the case should force stakeholders to revamp the entire process and select a resolution plan more robustly to ensure that future bidders are fully committed. This is equally true for bidders - Liberty House, for instance, has been saying it was misled into buying Amtek Auto - who need a way to check the assets of companies they are trying to buy.
Though the insolvency law does include penalties for those who don't pay up after winning the bids, a better process is clearly a preferred option. This will check the credentials of companies up for sale, creditors and bidders, thereby preventing dubious players from bidding under the insolvency law.
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