• Supreme Court upholds Section 32A of Insolvency and Bankruptcy Code (IBC) saying that the successful bidders for a corporate debtor would be immune from any investigations being conducted either by any investigating agencies such as the Enforcement Directorate (ED) or other statutory bodies such as Securities and Exchange Board of India (SEBI).

    • In its judgment, the apex court, while upholding the validity of Section 32A of IBC, said it was important for the IBC to attract bidders who would offer reasonable and fair value for the corporate debtor to ensure the timely completion of corporate insolvency resolution process (CIRP).

    • Such bidders, however, must also be granted protection from any misdeeds of the past since they had nothing to do with it and such protection must also extend to the assets of a corporate debtor.

    • SC says that the extinguishment of the criminal liability of the corporate debtor is apparently important to the new management to make a clean break with the past and start on a clean slate.

    • The protection to successful bidders and the assets of a corporate debtor are provided by the rules under Section 32A of the IBC.

    • However, such immunity would be applicable only if there is an approved resolution plan, and a change in the management control of the corporate debtor.

    • Since the IBC came into being in 2016, the implementation of resolution plan of several big ticket cases has been delayed because of various challenges mounted by its own agencies and regulators.

    • Supreme Court upholding the validity of Section 32 A will give confidence to other bidders to proceed with confidence while bidding on such disputed companies and their assets.

(The author is a trainer for Civil Services aspirants. The views expressed here are personal.)