IBBI, IBA to launch Platform (eBKray) for asset liquidation
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www.carajput.com; IBBI
IBBI, IBA to launch centralised platform (eBKray platform) for asset liquidation
The eBKray platform is a crucial step toward modernizing the IBC’s liquidation framework. By addressing issues like fragmented processes, limited buyer access, and inadequate recovery rates, it ensures fairer, more efficient outcomes for all stakeholders. This reform not only supports creditors and buyers but also strengthens the integrity and effectiveness of India’s insolvency resolution framework.
IBBI launch of the eBKray platform represents a transformative reform for the Insolvency and Bankruptcy Code (IBC), addressing critical challenges that have long hindered the efficiency of asset liquidation processes.
eBKray platform, in collaboration with the Indian Banks’ Association and the Insolvency and Bankruptcy Board of India, marks a significant step forward in streamlining the auction process for assets undergoing liquidation under the IBC.
The IBBI circular mandating the use of eBKray for asset auctions comes into effect on November 1, 2024. Liquidators must comply by listing assets with complete details, ensuring readiness for auctions under this system.
Highlights of IBA and the IBBI initiative:
Centralized Platform for Asset Auctions
Collaboration and Management:
Developed and managed by PSB Alliance Private Limited, a consortium of 12 public sector banks.
Previously used for auctioning assets mortgaged to public sector banks under the SARFAESI Act.
Purpose and Deployment:
Initially rolled out in pilot mode with enhancements to follow based on usage feedback.
Full implementation expected in later phases.
Key Features:
A centralized listing and auction platform for IBC assets.
Details like lien/attachment status, geographical coordinates, and auction timelines will be pre-listed.
Accessible to potential buyers well in advance to enhance transparency and participation.
Benefits of the eBKray Platform:
For Buyers:
Resolves information asymmetry by continuously hosting details of all assets under liquidation. Access to well-documented and continuously available asset information.
Allows more time for valuation, leading to better price discovery.
Ample time to make informed bidding decisions.
For Creditors:
Increased transparency and efficiency through technology.
Expected to maximize returns and reduce recovery delays.
Higher recovery rates through better price discovery.
Reduced delays, ensuring quicker resolution and distribution of proceeds.
For Insolvency Processes:
Centralized system ensures wider participation and reduces duplication.
Establishes greater trust in the insolvency process by reducing inefficiencies.
Standardized procedures enhance confidence in the IBC framework.
Aligns with international best practices for transparency and standardization
Challenges in Current Liquidation Processes: The launch of the eBKray platform represents a transformative reform for the Insolvency and Bankruptcy Code (IBC), addressing critical challenges that have long hindered the efficiency of asset liquidation processes.
Addressing Existing Challenges- Current Issues:
Fragmented Platforms:
Assets are sold via disparate auction platforms.
Lack of a unified system leads to inconsistent practices and restricted visibility.
Fragmented auction platforms lead to limited visibility and participation.
Information Asymmetry:
Asset details are disclosed only during auction notices.
Buyers have limited time for due diligence, reducing the potential for optimal bids.
Late disclosure of asset details restricts valuation, causing lower recovery rates.
Inadequate Recovery Rates:
Limited bidder participation often leads to lower price discovery.
Heavy haircuts for creditors are common due to poor realization of asset values. Heavy haircuts and undue delays are common.
How the eBKray Platform Solves These Problems
A unified platform bridges these gaps, ensuring, Transparency, Wider market access, Better recovery outcomes for creditors
Centralized Asset Listings: Provides a single, continuously updated repository for assets under liquidation. Details include lien/attachment status, geographical coordinates, and auction timelines.
Enhanced Transparency: Continuous availability of information empowers buyers with sufficient time for asset valuation. Reduces ambiguity, improving bidder confidence.
Technology-Driven Efficiency: Advanced digital tools streamline the auction process, ensuring fair competition and smoother operations.
Improved Market Reach: A unified platform attracts a wider pool of potential buyers, ensuring better participation.
For assistance or queries related to the eBKray platform, you can email the designated support team mentioned on the IBBI portal.
Swatantra Kumar singh Partner Rajput Jain and associates at www.carajput.com : Highlights the reform as a long-awaited step in improving recovery rates. Expects better price discovery and wider market access due to the platform’s transparency and efficiency.
The eBKray platform is a crucial step toward modernizing the IBC’s liquidation framework. By addressing issues like fragmented processes, limited buyer access, and inadequate recovery rates, it ensures fairer, more efficient outcomes for all stakeholders. This reform not only supports creditors and buyers but also strengthens the integrity and effectiveness of India’s insolvency resolution framework.
Non-Compliant Practice Identified on EMD collection and document submission during liquidation auctions
strict adherence to the IBBI Circular dated 28th March 2025, which mandates the exclusive use of the Baanknet auction platform for EMD collection and document submission during liquidation auctions from 1st April 2025 onwards. IPs have been mentioning EMD submission in the name of the Corporate Debtor’s liquidation account via Demand Draft or NEFT/RTGS, in contradiction to the IBBI directive. IBBI Circular dated 28th March 2025
Mandated Protocol as per IBBI Circular:
Auction Platform: All auctions (notices issued on or after 1 April 2025) must be conducted exclusively via the BAANKNET platform. All EMDs must be submitted only through the BAANKNET platform—no direct bank transfers or DDs to liquidation accounts are allowed. Declarations under Section 29A of IBC and other relevant bidder documents must be uploaded via BAANKNET only.
Immediate Action Required by IPs:
Audit Past Notices/Process Docs: Identify any auction notices or documents published after 1 April 2025 that mention alternate EMD submission methods. Promptly publish corrections to align the EMD and document submission instructions with the IBBI Circular. IP must ensure all future auction templates and communications:
Clearly state that EMD is to be paid only via BAANKNET.
Remove any reference to the corporate debtor’s liquidation account for EMD.
Internal Controls: Implement a compliance checklist or SOP to avoid recurrence of non-compliance.
1 year ago
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