{"id":8096,"date":"2019-12-30T08:30:32","date_gmt":"2019-12-30T03:00:32","guid":{"rendered":"https:\/\/swaritadvisors.com\/learning\/?p=8096"},"modified":"2023-03-18T14:47:07","modified_gmt":"2023-03-18T09:17:07","slug":"nbfcs-with-assets-worth-500-crore-shall-be-brought-under-ibc-purview","status":"publish","type":"post","link":"https:\/\/swaritadvisors.com\/learning\/nbfcs-with-assets-worth-500-crore-shall-be-brought-under-ibc-purview\/","title":{"rendered":"NBFCs with assets worth 500 Crore shall be brought under IBC purview"},"content":{"rendered":"\n<p class=\"has-drop-cap\">On November 18, 2019, the Ministry of Corporate Affairs in consultation with Government of India and RBI has<strong>&nbsp;<\/strong>issued a notification. It notifies the rules under Section 227 of the Insolvency and Bankruptcy Code (IBC), 2016. It enables the National Company Law Tribunal to pass an order of faster resolution plan for Non-Banking Financial Companies (NBFCs).&nbsp;Read to know more NBFCs with assets worth 500 Crore shall be brought under IBC purview<\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_65 counter-hierarchy ez-toc-counter ez-toc-light-blue ez-toc-container-direction\">\n<p class=\"ez-toc-title\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-6a3a4a6a8543e\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-6a3a4a6a8543e\"  aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/swaritadvisors.com\/learning\/nbfcs-with-assets-worth-500-crore-shall-be-brought-under-ibc-purview\/#Thumbnail_of_the_Story\" title=\"Thumbnail of the Story \">Thumbnail of the Story <\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/swaritadvisors.com\/learning\/nbfcs-with-assets-worth-500-crore-shall-be-brought-under-ibc-purview\/#NBFCs_and_HFCs_Response_to_the_MCA_Notification\" title=\"NBFCs and HFCs Response to the MCA Notification \">NBFCs and HFCs Response to the MCA Notification <\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/swaritadvisors.com\/learning\/nbfcs-with-assets-worth-500-crore-shall-be-brought-under-ibc-purview\/#Conclusion\" title=\"Conclusion \">Conclusion <\/a><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Thumbnail_of_the_Story\"><\/span>Thumbnail of the Story <span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The Government sets up regulations under the IBC to ensure the resolution of stressed HFCs and NBFCs. MCA notification will permit the existing consortium of lenders and the current resolution professional to undertake the financial services of NBFC to the NCLT. Have a look at the crux of the notification:<\/p>\n\n\n\n<ul><li>As per the new IBC provisions (Non-Banking Financial Companies) NBFCs&nbsp;and  HFCs with assets worth&nbsp;Rs 500 Crore&nbsp;shall be taken for&nbsp;debt resolution &amp; liquidation proceedings.<\/li><li>Further, this step will help NBFCs to overcome the problem of the liquidity crisis.<\/li><li>As per a source \u201c, once banks take upon <a href=\"https:\/\/swaritadvisors.com\/nbfc-registration\" class=\"text-primary\"><strong>NBFC<\/strong><\/a> for the resolution to the NCLT, all the cases filed by disparate creditors will get nullified.\u201d<\/li><li>The action which boosts such resolution in cases like DHFL is that different creditors pursue variant recovery methods.<\/li><li> For instance, several bondholders move to debt recovery tribunals in fear of a haircut. However, once the insolvency resolution plan came into effect under the NCLT mechanism, no creditors can go to separate forums for relief.<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"NBFCs_and_HFCs_Response_to_the_MCA_Notification\"><\/span>NBFCs and HFCs Response to the MCA Notification <span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Though many NBFCs embrace the insolvency resolution with open arms, others show their disapproval. In the case of <strong>DHFL (Dewan Housing Finance Corporation Ltd<\/strong><sup><a href=\"https:\/\/www.nseindia.com\/get-quotes\/equity?symbol=DHFL\" class=\"text-primary\"><strong>[1]<\/strong><\/a><\/sup><strong>.)<\/strong>, most stakeholders were in favour of the resolution, but some bondholder\u2019s exhibits dissent. Besides, they sought repayment of their full dues and filed cases in courts, sources familiar with the said development.<\/p>\n\n\n\n<p>As per the reports of the debt resolution plan 2019, DHFL\nwith outstanding loans of about Rs 78,000 Crore has faced liquidity pressure\nsince the IL&amp;FS crisis hit the NBFC sector in September 2018. A list of\ndebt defaults by IL&amp;FS has risen into a broader liquidity crisis for the\nmarkets that put pressure on several NBFCs.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Conclusion\"><\/span>Conclusion <span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Lately, NBFCs and HFCs have been facing much stress to honour its debt repayments, and thus they started selling profitable subsidiaries to raise funds. DHFL and promoter firm, Wadhawan Global Capital, has sold around 80% of its combined stake in education loan Company namely, Avanse Financial Services Ltd.  Moreover, the Wadhawan Global Capital has also sold its 70% of stake to Aadhar Housing Finance and Blackstone group. Hence, one can foresee that insolvency resolution will bring a positive change for NBFC and HFCs.<\/p>\n\n\n\n<div class=\"read\"><p><b>Also, Read:<\/b> <mark style=\"background: #fffd03 !important;\"><a href=\"https:\/\/swaritadvisors.com\/learning\/incorporation-of-innovation-in-the-non-banking-financial-companies-nbfcs\/\">Incorporation of Innovation in the Non-Banking Financial Companies<\/a><\/mark>.<\/p><\/div>\n","protected":false},"excerpt":{"rendered":"<p>On November 18, 2019, the Ministry of Corporate Affairs in consultation with Government of India and RBI has&nbsp;issued a notification. It notifies the rules under Section 227 of the Insolvency and Bankruptcy Code (IBC), 2016. It enables the National Company Law Tribunal to pass an order of faster resolution plan for Non-Banking Financial Companies (NBFCs).&nbsp;Read [&hellip;]<\/p>\n","protected":false},"author":10,"featured_media":8097,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[89,1],"tags":[1017],"_links":{"self":[{"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/posts\/8096"}],"collection":[{"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/users\/10"}],"replies":[{"embeddable":true,"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/comments?post=8096"}],"version-history":[{"count":24,"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/posts\/8096\/revisions"}],"predecessor-version":[{"id":19095,"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/posts\/8096\/revisions\/19095"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/media\/8097"}],"wp:attachment":[{"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/media?parent=8096"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/categories?post=8096"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/tags?post=8096"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}