New Delhi, May 26 (KNN) Commenting over the recent proposed amendment in the IBC, Insolvency and Bankruptcy Board of India (IBBI) Chairman MS Sahoo has said there was a “rationale” for treating promoters of micro, small and medium enterprises (MSMEs) differently from the promoters of larger companies.

He made the above remarks on the sidelines of a conference organized by FICCI on Friday.

He explained “when a big company goes into liquidation, it is the MSMEs that take a hit because, often, they have only one buyer for their goods. MSMEs are treated differently everywhere, and there is a rationale for it.”

According to the newly proposed IBC amendments, promoters of MSMEs, apart from those who have been classified as willful defaulters, are likely to be allowed to bid for their companies at the National Company Law Tribunal (NCLT).

Making the promoters eligible to bid for their companies would help bankers recover a bigger share of their dues.

Currently, they are barred from doing so under the ambit of Section 29 (A) of the Insolvency and Bankruptcy Code (IBC).

Earlier this week, the Union Cabinet approved an ordinance amending the IBC. The changes need to be ratified by the President of India.

So far, there has been limited interest for the MSME units at the NCLT.

Being into a custodian and trustee position, the committee of creditors (CoC) has a higher responsibility to look at the interest of all the stakeholders, Sahoo said.

 He further said that the objective of the bankruptcy law is to resolve insolvency and revive an asset for collective good and not to maximize value for a chosen few.