Latest news with #IBC
Mint
10 hours ago
- Business
- Mint
IBC's weak spot: Slow, difficult recovery from dubious pre-bankruptcy deals
New Delhi: Companies on the brink of collapse tend to do certain transactions that benefit the promoters or close partners but are detrimental to the organization and its creditors. While such 'dubious transactions' can later be set aside during bankruptcy proceedings by tribunals, getting the money back is proving an uphill task. Data from regulator Insolvency and Bankruptcy Board of India (IBBI) reviewed by Mint showed that in FY25, just ₹1,322 crore or a tenth of the amount involved in 'avoidance transactions' disposed of by tribunals were recovered. And overall, just 12% of the ₹65,650 crore worth voidable deals executed by promoters and management of 368 companies–and where tribunals have given their verdict–were recovered, according to IBBI. Such deals could include paying off a friendly creditor just before bankruptcy proceedings while ignoring others, moving assets to related parties or hiding them, selling assets for less than they're worth, or taking loans on unfair or excessive terms. Also read | A series of court orders changed bankruptcy rules. Now, the govt is amending the law 'There is often misconduct by earlier management pre-insolvency and it might be a reason for the insolvency in some cases," said Dhananjay Kumar, partner (head-insolvency and restructuring) at law firm Cyril Amarchand Mangaldas. 'Recovery of such amounts is a fundamental function of a law like IBC (Insolvency and Bankruptcy Code)," added Kumar. Other challenges pointed out by Kumar include lack of data to challenge these transactions, lack of funds with resolution professionals, and slow movement in National Company Law Tribunal (NCLT). The matter assumes significance because money recovered from dubious transactions adds to the pool of resources available for a corporate restructure plan. According to IBBI's estimates, on a conservative scale, a decision on avoidance transactions by tribunals would add recovery to creditors by at least 10%. Yogendra Aldak, partner at Lakshmikumaran and Sridharan Attorneys, said the high amounts being flagged as avoidance transactions highlight an alarming trend of promoters deliberately using such transactions 'to deprive a company of its resources for self-serving purposes leading to a snowball effect during times of stress". Read this | Scrapping a key bankruptcy rule may yield faster liquidation, better recovery Further, Aldak said IBC has not been designed as a debt-recovery machine and, instead, prioritises resolution of distressed companies. So, to avoid delays in rescuing businesses, taking decisions on avoidance transactions has been kept independent of corporate debt resolution. However, this makes it hard to recover money from avoidance transactions. For example, only deals made within two years before the insolvency process can be reviewed, which means many questionable transactions are never examined, Aldak explained. Another problem, he said, is tracking the money, as it is often moved through shell companies or hidden in other countries, making recovery even harder. Anisha Jhunjhunwala, senior consultant-IBC at NPV Insolvency Professionals Pvt. Ltd, said that despite clear evidence, enforcing clawbacks from avoidance transactions is a lengthy legal battle, with promoters delaying proceedings through litigation, and tracing diverted assets is complex, especially when routed through layers of related entities or parked overseas. Also read | NCLT member crunch slows down bankruptcy resolution 'The high quantum of flagged transactions reflects serious lapses and, in some cases, wilful misconduct by promoters, particularly during the twilight period before insolvency," said Jhunjhunwala. 'It shows that promoters, anticipating distress, often prioritize asset stripping over stakeholder interest, highlighting the need for stricter pre-insolvency oversight and faster adjudication timelines." The fact that it often takes considerable time for a bankruptcy petition by a creditor to be admitted in a tribunal only allows more time for such unscrupulous activities to take place. Till the end of March 2025, close to 1,200 bankrupt enterprises have been restructured under IBC and their creditors got the chance to recover ₹3.89 trillion or about a third of their admitted claims. This is in addition to proceeds from companies liquidated and the recoveries made by lenders who struck settlement deals with corporate borrowers before tribunals initiated insolvency proceedings. And read | Bankruptcy resolution professionals face creditor fury as cases reach courts
India.com
17 hours ago
- Business
- India.com
Big move by Gautam Adani, acquires this former company of Anil Ambani, its name is…
Adani Power Ltd has moved forward in the process of acquiring the bankrupt Vidarbha Industries Power Ltd. It is a former subsidiary of Anil Ambani led Reliance Power Ltd. The National Company Law Tribunal on 18 June approved Adani Power's Rs 4,000 crore resolution plan to acquire VIPL. A majority nod was given by secured creditors in February. Adani Power will pay Rs 4,000 crore to acquire the company. Vidarbha Industries owns a 600-megawatt thermal power plant in Nagpur. The resolution plan received 100% voting share. The tribunal also found this plan suitable for revival. Vidarbha Industries Power Current Situation The company has admitted liabilities of Rs 6,753 crore, and the successful resolution plan has proposed to pay Rs 4,000 crore to acquire the company. 'We find that the Resolution Plan has been approved with 100% voting share. As per the CoC, the plan meets the requirement of being viable and feasible for the revival of the Corporate Debtor,' said the division bench of judicial member Nilesh Sharma and a technical member, Sameer Kakar, in its 75-page order. 'We also observe that none of the stakeholders in the process of CIRP have come forward before this Tribunal with an application objecting to the approval of this Resolution Plan,' added the tribunal. The tribunal also observed that the resolution plan is binding on the Corporate Debtor (VIPL), its employees, members, creditors, guarantors and other stakeholders. VIPL Anil Ambani Connection VIPL was earlier a subsidiary of Anil Ambani-owned Reliance Power. It declard insolvency proceedings under the Insolvency and Bankruptcy Code (IBC). Reliance Power had announced last year that VIPL was no longer its subsidiary. Bimal Kumar Agarwal was appointed by the bench for the interim resolution professional (IRP) to look after the insolvency process. This also includes managing VIPL's assets and inviting resolution plans.
Mint
19 hours ago
- Business
- Mint
Adani Power adds Reliance Power's former unit to its string of acquisitions
Next Story Krishna Yadav NCLT has approved Adani Power's ₹ 4,000 crore resolution plan to acquire Vidarbha Industries Power Ltd. Adani Power is looking to increase its power-generating capacity to 30.67 GW by 2030 from 17.55 GW now, making it India's largest private sector capacity expansion. (Reuters) Gift this article Adani Power Ltd has inched closer to acquiring the bankrupt Vidarbha Industries Power Ltd, a former subsidiary of Reliance Power Ltd, adding to a list of distressed but strategically located power assets as it strives towards its goal. Adani Power Ltd has inched closer to acquiring the bankrupt Vidarbha Industries Power Ltd, a former subsidiary of Reliance Power Ltd, adding to a list of distressed but strategically located power assets as it strives towards its goal. The National Company Law Tribunal on 18 June approved Adani Power's ₹ 4,000 crore resolution plan to acquire VIPL following a majority nod in February by the distressed company's committee of creditors. Adani Power aims to increase its 17.55 GW of power-generating capacity—including thermal plants across states and a 40 MW solar project in Gujarat—to 30.67 GW by 2030, making it the largest private sector capacity expansion in the country. With its latest acquisition, Adani Power will gain control of VIPL's 600 MW thermal power plant in Butibori, Nagpur, comprising two 300 MW units. The plant has a long-term power purchase agreement with the Maharashtra government for 308.5 MW, ensuring stable cash flows and potential for future scale-up. The VIPL deal follows Adani's recent acquisitions of Dahanu Power ( ₹ 815 crore), Lanco Amarkantak Power, and Coastal Energen ( ₹ 3,330.88 crore), underscoring the group's strategy to drive growth. On Thursday, 19 June, Adani Power shares fell 3.2% to ₹ 533.20 each on NSE, while the Nifty 50 held steady, shedding just 18.80 points amid geopolitical tensions because of the escalating Israel-Iran conflict. VIPL's insolvency Vidarbha Industries Power was admitted into insolvency in September 2024 after CFM Asset Reconstruction moved the tribunal under the Insolvency and Bankruptcy Code (IBC). On 24 February this year, Adani Power informed stock exchanges that VIPL's lenders had approved its revival plan, subject to the terms of the letter of intent and necessary regulatory approvals. Adani Power had emerged as the successful resolution applicant after a competitive process that attracted bids from several major players, including Capri Global Holdings, CESC Ltd, Hindustan Thermal Projects, Jindal Power, JSW Energy, NTPC Ltd, Orissa Metaliks, Vedanta Ltd, and Shriniwas Spintex Industries. Under the approved plan, Adani Power will pay ₹ 4,000 crore against total admitted liabilities of ₹ 6,753 crore. The Adani entity has been directed to complete the payment within the stipulated timeframe. 'The Resolution Applicant is directed to make payment of the entire Resolution Plan amount within the time period stipulated under the Resolution Plan, failing which the entire amount paid shall stand forfeited," a Mumbai bench of the NCLT said in its 18 June order. As per the plan, the funding will be arranged through internal accruals or financing by eligible affiliates, with the flexibility to raise capital via equity, debt, preference shares, or external commercial borrowings. Reliance Power's exit VIPL was originally established as a special-purpose vehicle by Reliance Power to develop a 600 MW thermal power plant in Butibori, Nagpur, under a concession from the Maharashtra Industrial Development Corporation. The project was later converted into an independent power project. In September 2024, Reliance Power announced that VIPL was no longer its subsidiary after settling ₹ 3,872 crore in corporate guarantees extended on its behalf. As part of the settlement with CFM Asset Reconstruction, all associated obligations were released and 100% of VIPL's shares were pledged in favour of CFM. VIPL had defaulted on loans from Axis Bank and State Bank of India, which were later acquired by CFM ARC. Topics You May Be Interested In Catch all the Business News , Corporate news , Breaking News Events and Latest News Updates on Live Mint. Download The Mint News App to get Daily Market Updates.
Mint
21 hours ago
- Business
- Mint
Adani Power adds Reliance Power's former unit to its string to acquisitions
Adani Power Ltd has inched closer to acquiring the bankrupt Vidarbha Industries Power Ltd, a former subsidiary of Reliance Power Ltd, adding to a list of distressed but strategically located power assets as it strives towards its goal. The National Company Law Tribunal on 18 June approved Adani Power's ₹4,000 crore resolution plan to acquire VIPL following a majority nod in February by the distressed company's committee of creditors. Adani Power aims to increase its 17.55 GW of power-generating capacity—including thermal plants across states and a 40 MW solar project in Gujarat—to 30.67 GW by 2030, making it the largest private sector capacity expansion in the country. With its latest acquisition, Adani Power will gain control of VIPL's 600 MW thermal power plant in Butibori, Nagpur, comprising two 300 MW units. The plant has a long-term power purchase agreement with the Maharashtra government for 308.5 MW, ensuring stable cash flows and potential for future scale-up. The VIPL deal follows Adani's recent acquisitions of Dahanu Power ( ₹815 crore), Lanco Amarkantak Power, and Coastal Energen ( ₹3,330.88 crore), underscoring the group's strategy to drive growth. On Thursday, 19 June, Adani Power shares fell 3.2% to ₹533.20 each on NSE, while the Nifty 50 held steady, shedding just 18.80 points amid geopolitical tensions because of the escalating Israel-Iran conflict. Also read | Adani Group to raise ₹2.5 trillion over five years to fund capex VIPL's insolvency Vidarbha Industries Power was admitted into insolvency in September 2024 after CFM Asset Reconstruction moved the tribunal under the Insolvency and Bankruptcy Code (IBC). On 24 February this year, Adani Power informed stock exchanges that VIPL's lenders had approved its revival plan, subject to the terms of the letter of intent and necessary regulatory approvals. Adani Power had emerged as the successful resolution applicant after a competitive process that attracted bids from several major players, including Capri Global Holdings, CESC Ltd, Hindustan Thermal Projects, Jindal Power, JSW Energy, NTPC Ltd, Orissa Metaliks, Vedanta Ltd, and Shriniwas Spintex Industries. Under the approved plan, Adani Power will pay ₹4,000 crore against total admitted liabilities of ₹6,753 crore. The Adani entity has been directed to complete the payment within the stipulated timeframe. 'The Resolution Applicant is directed to make payment of the entire Resolution Plan amount within the time period stipulated under the Resolution Plan, failing which the entire amount paid shall stand forfeited," a Mumbai bench of the NCLT said in its 18 June order. As per the plan, the funding will be arranged through internal accruals or financing by eligible affiliates, with the flexibility to raise capital via equity, debt, preference shares, or external commercial borrowings. Also read | Adani, Reliance among participants in NPCIL's small nuclear reactor project Reliance Power's exit VIPL was originally established as a special-purpose vehicle by Reliance Power to develop a 600 MW thermal power plant in Butibori, Nagpur, under a concession from the Maharashtra Industrial Development Corporation. The project was later converted into an independent power project. In September 2024, Reliance Power announced that VIPL was no longer its subsidiary after settling ₹3,872 crore in corporate guarantees extended on its behalf. As part of the settlement with CFM Asset Reconstruction, all associated obligations were released and 100% of VIPL's shares were pledged in favour of CFM. VIPL had defaulted on loans from Axis Bank and State Bank of India, which were later acquired by CFM ARC. Also read | Is the Israel-Iran war a billion-dollar threat to Adani Ports & SEZ?
Time Business News
2 days ago
- Business
- Time Business News
Regulatory Trends: How Jurisdictions Are Embracing Banking Passports
VANCOUVER, British Columbia — The global financial ecosystem is undergoing a quiet but significant transformation. Amid tightening regulations, rising de-risking, and digital compliance automation, jurisdictions around the world are beginning to adopt the banking passport, not as a loophole, but as a legal instrument for facilitating global financial mobility. Amicus International Consulting, a global leader in legal identity structuring and offshore compliance, releases this in-depth analysis on the evolving regulatory landscape that is legitimizing and integrating banking passports into standard cross-border onboarding practices. What began as a necessity for politically exposed or geographically restricted individuals is now being formalized by forward-thinking regulators as a tool for de-bureaucratized banking, risk balancing, and inclusive financial access. The Banking Passport: A Legal Financial Identity Portfolio. At its core, a banking passport is a set of verified documents and jurisdictional structures that allow an individual or entity to: Open international accounts. Comply with Know Your Customer (KYC) and Enhanced Due Diligence (EDD) requirements. Operate across borders with fiscal legitimacy and transparency of risk. These typically include: A second citizenship or residency in a low-risk jurisdiction. A Tax Identification Number (TIN). A legally registered International Business Corporation (IBC). Proof of legal residence and address. Source of funds documentation and KYC compliance bundle. When properly constructed, banking passports provide a coherent and legally sound identity narrative that meets banks' increasingly algorithm-driven compliance demands. Why Governments Are Warming to Banking Passports. Historically, offshore financial identity tools have been viewed with suspicion. Today, three key trends are shifting that narrative: ✅ 1. De-risking and Overcompliance Since 2015, major banks have dropped clients in high-risk jurisdictions (including entire regions) to avoid compliance fines. This has left many legitimate users — mainly from Africa, Latin America, and parts of Asia — financially disenfranchised. Banking passports offer a way for these users to Acquire low-risk citizenship. Re-establish credibility under OECD-compliant documentation. Re-enter the financial system with precise risk segmentation. ✅ 2. CRS and FATCA Normalization: As more jurisdictions implement the Common Reporting Standard (CRS) and Foreign Account Tax Compliance Act (FATCA) regimes, governments recognize that identity fluidity is inevitable. By embracing structured multi-jurisdictional banking identities, they can: Retain high-net-worth individuals (HNWIs). Attract legitimate offshore business. Ensure tax compliance across mobility. ✅ 3. Fintech Inclusion and API-driven KYC Digital banks and payment providers now rely on API-driven KYC systems. Structured banking passports — with clean metadata, consistent identifiers, and digital proofs — integrate more easily into these systems than fragmented or outdated local documents. Case Study: Panama's Regulatory Upgrade Boosts Banking Passport Demand. In 2024, Panama passed reforms to its residency-by-investment program, aligning it with OECD substance rules and FATF guidelines. This made Panamanian tax residency and IBC ownership more attractive for banking passport strategies. Amicus clients using Panamanian structures saw: Reduced onboarding times in Singapore and Dubai. Higher acceptance rates with Swiss Tier-2 private banks. Faster crypto-fiat conversion access due to clearer documentation trails. Panama now markets itself as a 'mobility jurisdiction,' encouraging compliant multi-national individuals to base their financial identity legally in-country. How Jurisdictions Are Embracing Banking Passports: A Global Overview Jurisdiction Integration Strategy Portugal Golden Visa residents can use local residency and TIN for EEA banking UAE Recognizes residency-based banking passports for non-citizen clients Malta Citizenship-by-investment includes full banking compliance certification Dominica Offers digital banking onboarding for CBI holders Mauritius Encourages global TIN registration through Fintech Sandbox access Singapore Accepts structured offshore identities with FATF-aligned declarations These jurisdictions recognize that banking passports reduce onboarding friction, support compliance goals, and attract globally mobile capital. From Fringe to Framework: The Legal Normalization of Banking Passports. Over the past five years, multiple institutions and regulatory bodies have released guidance legitimizing multi-jurisdictional financial identities: OECD Tax Transparency Initiative (2022): Encouraged the harmonized use of TINs for globally mobile individuals. Encouraged the harmonized use of TINs for globally mobile individuals. FATF Recommendation 10 : Recognized risk-based onboarding using layered identity profiles. Recognized risk-based onboarding using layered identity profiles. Basel Committee (2023): Recommended flexible identity criteria for fintech inclusion. Amicus collaborates with regulators in emerging markets to create sandbox-compliant banking passport templates — pre-approved identity packages that meet the requirements of onboarding systems at scale. Case Study: African Startup Founder Uses Structured Identity to Bank Globally. A Kenyan fintech founder faced rejection from multiple payment platforms due to local Know Your Customer (KYC) limitations and nationality-based risk assessments. Amicus structured: A second passport through St. Lucia's donation program. A Singapore-based fintech holding company with tax transparency. A crypto wallet identity trail backed by financial statements. He now banks in Estonia, Hong Kong, and Mauritius — fully compliant and no longer limited by regional systemic bias. Digital-First Governments Are Leading the Way. Several jurisdictions are proactively embedding banking passport logic into their e-residency or digital identity frameworks: 🇪🇪 Estonia E-residency enables global entrepreneurs to obtain EU TINs, register EU companies, and access digital banking — all without requiring physical presence. 🇦🇪 UAE Free zones now accept 'banking passport profiles' for international account setup, provided TIN and tax domicile are clear. 🇺🇾 Uruguay Latin America's most progressive mobility jurisdiction, offering low-tax residency to banking passport holders, with automatic OECD alignment. Amicus is working with multiple ministries to develop Banking Identity Certification Platforms — government-backed identity attestations with blockchain verification layers. Second Citizenship: The Regulatory Pivot Point. The backbone of many banking passports is a second citizenship. Countries embracing this as part of their financial inclusion strategy are: Country Program Type Regulatory Notes Antigua & Barbuda Citizenship by donation Full FATF compliance, aligned with EU blacklist avoidance St. Kitts & Nevis Real estate and donation-based CBI Includes banking letter and TIN upon approval Malta Exceptional Investment Naturalization Includes EU TIN, passport, and tax planning module Vanuatu Citizenship via offshore escrow Working to meet AML targets under FATF pressure Each of these programs has begun pre-validating clients through compliance units — making their documents easier to integrate into offshore banking platforms. Regulators Benefit from Embracing Banking Passports. When jurisdictions adopt structured banking identities, they gain: Increased capital inflows through residency and citizenship programs. through residency and citizenship programs. Improved tax revenue through declared TINs and economic substance. through declared TINs and economic substance. Enhanced AML oversight via pre-vetted, centralized identity portals. via pre-vetted, centralized identity portals. Reputation boost among private banking and fintech institutions. Instead of blocking mobile clients, these jurisdictions attract them with rules that protect both the client and the system. Case Study: A Political Risk Insurance Broker Uses Dual Identity to Navigate Sanctions. A Belarusian insurance professional found that his nationality placed him under enhanced sanctions screening, despite never being politically active. With Amicus: He secured dual citizenship in Dominica. Used his new nationality to register a brokerage in Cyprus. Filed a new TIN under the European framework. His banking passport enabled him to clear risk assessments and open brokerage escrow accounts in Switzerland and the UAE — legally, with the cooperation of the relevant regulators. Looking Ahead: Global Banking Identity Registries Amicus predicts that jurisdictions will soon participate in cross-certified banking identity registries — cloud-based or blockchain-backed repositories of: TINs KYC files Economic substance certificates Risk assessments. These registries will Expedite onboarding for clients with banking passports. Allow institutions to validate multi-jurisdictional structures instantly. Lower the compliance cost for both banks and clients. Best Practices for Clients and Policymakers. For clients: Avoid inconsistent documentation across jurisdictions. Ensure your banking passport aligns with the CRS and FATCA requirements. Use government-sanctioned programs for second citizenship or residency. Maintain clear source-of-funds documentation. For governments: Recognize banking passports as compliance tools, not evasion risks. Create centralized identity certification units. Partner with platforms like Amicus to design sandbox models. Align residency programs with OECD and FATF standards. Conclusion: The Banking Passport Is Now a Global Norm — Not a Grey Zone. Jurisdictions that once viewed banking passports as threats are now building infrastructure around them. As the world continues to fragment politically and digitize financially, structured legal financial identities are no longer just a workaround — they are the future. Amicus International Consulting helps clients and governments design that future with integrity, compliance, and financial sovereignty at the center. 📞 Contact InformationPhone: +1 (604) 200-5402Email: info@ Website:
