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In April 2019, FRG submitted its response to
the IBBI Working Group on Group Insolvency. The response evaluates the
need for a legislative framework for insolvency of debtor firms that
belong to a "group". It highlights the fact that:
- creditors to firms in business groups can use contractual safeguards to protect
their interests, and
- the IBC already has provisions to deal with
fraudulent and malfeasant actions of debtors.
Given this, a framework for substantive consolidation of insolvency
proceedings of debtor firms in a business group may be undesirable and
may adversely impact credit markets. The response also notes that, if
at all, there may be a case for developing a guiding framework for
procedural consolidation that is based on creditors' consent.
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