The recent changes to the Insolvency and Bankruptcy Code (IBC) through an Ordinance has brought into stark relief an enduring cliché — “good politics is not good economics”. The amended IBC essentially bars controlling shareholders (or promoters) of companies from bidding for their bankrupt companies that are being auctioned off via the NCLT (National Company Law Tribunal)-overseen process. Before this amendment came through, bidders in many of these cases before the NCLT included promoters (eg, Ruias for Essar Steel). The politics of this is ostensibly simple — harsh measures against big business make for good optics and good messaging. In this case, the good politics of the law makes for good economic principles too.

Source: dna November 29, 2017 01:52 UTC