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CENTRALIZED PLATFORM FOR LIQUIDATION AUCTIONS SET TO LAUNCH UNDER IBC

CENTRALIZED PLATFORM FOR LIQUIDATION AUCTIONS SET TO LAUNCH UNDER IBC

In a transformative move for India’s insolvency landscape, the Insolvency and Bankruptcy Board of India (IBBI) has announced the establishment of a centralized platform for the listing and auctioning of assets undergoing liquidation under the Insolvency and Bankruptcy Code (IBC). This initiative comes as a collaboration with the Indian Banks’ Association (IBA) and aims to streamline the auction process for assets linked to insolvency proceedings.

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.

The new platform, known as eBKray, will be managed by PSB Alliance Private Limited, a consortium of 12 public sector banks that has successfully conducted auctions for mortgaged assets under the SARFAESI Act over the past five years. The integration of IBC assets into this established system marks a significant step towards improving the efficiency and transparency of the insolvency process in India.

Starting from November 1, 2024, the eBKray platform will initially operate in a pilot mode. This approach allows for real-time feedback and adjustments based on user experiences before a comprehensive rollout. The IBBI has emphasized that the PSB Alliance has developed specific modules within the eBKray platform tailored to facilitate the listing and auction of IBC assets, which is expected to enhance the overall experience for all participants.

One of the key features of the eBKray platform is its aim to eliminate information asymmetry that currently exists in the liquidation process. Traditionally, liquidators have used various auction platforms, and asset details are only made public at the time of auction notice. This limited access often restricts potential buyers’ ability to assess the true value of assets, resulting in lower recovery rates for creditors. By providing continuous access to asset information—including the status of liens, geographical coordinates, and anticipated auction dates—the eBKray platform seeks to empower bidders with the information they need to make informed decisions.

Experts have heralded this initiative as a long-awaited reform for the IBC, which has been grappling with challenges such as undue delays and inadequate recoveries, leading to substantial financial haircuts for creditors. Jyoti Prakash Gadia, Managing Director at Resurgent India, noted that the centralized auction platform is expected to broaden the market for potential buyers, improve price discovery, and ultimately lead to higher recovery levels.

The IBBI’s move to centralize asset auctions under one umbrella is expected to not only enhance transparency but also foster greater participation from bidders. With the integration of advanced technology, the eBKray platform aims to streamline operations, thus maximizing returns for creditors and creating a more efficient insolvency process.

As the IBBI prepares for the launch, stakeholders across the financial sector are keenly observing how this initiative will reshape the insolvency landscape in India, providing a structured approach that aligns with global best practices.

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