Sunayana Basu Mallik Calls for Stronger Protection of Retail Investors in Insolvency Framework
In a recent article published by The Hindu BusinessLine titled “Retail investors in Jaiprakash Associates to draw a blank after resolution plan approval,” Sunayana Basu Mallik highlighted a critical gap in India’s insolvency regime concerning the treatment of public shareholders.
Commenting on the outcome of the insolvency proceedings involving Jaiprakash Associates Limited, Mallik noted that retail investors are often left without meaningful recovery once a resolution plan is approved under the Insolvency and Bankruptcy Code, 2016.
She emphasized the need to strengthen investor confidence in capital markets by introducing binding regulatory measures within the insolvency framework. Sunayana suggested that, to enhance credibility of stock exchanges and listed companies, policymakers should consider mandating the refund of consideration received from public equity shareholders before the commencement or conclusion of the Corporate Insolvency Resolution Process (CIRP).
Further, she proposed that the responsibility for such payouts should rest with both the resolution applicant and the Committee of Creditors (CoC) approving the plan. While acknowledging that this may increase the cost and overall burden of acquiring distressed assets, she highlighted that such measures are essential to ensure fairness and balance within the insolvency ecosystem.
By entering the email address you agree to our Privacy Policy.