In 2016, Insolvency and Bankruptcy Code (IBC),2016 was introduced with the objective of time-bound insolvency resolution and maximisation of assets; to deal with a situation, where a debtor is unable to meet its obligation, commonly known as Insolvency. To achieve it’s objective, the code has vested its power in resolution providers (RP’s).
The RP’s as per section 25(1) are liable to preserve and protect the assets of the corporate debtor, and in order to do so the RP takes the immediate custody and control all the assets of the corporate debtor. From the bare reading, it may emerge that the RP is expected to take control of the assets which may be defined as CASE process...
Assets and CASE process
The life cycle of assets and its related information can be summarised in 4 steps, which we call as CASE Process:-
The CASE process starts with “Consolidating the asset information”, in which the information related to assets of corporate debtor are collected and consolidated.
The next step is “Acquisition”, wherein as the name suggests, the RP acquire the assets. This step includes the appointment of valuers to determine the liquidation value of the asset, as per the present state of the physical assets.
The third step is to Secure the assets, till the time the RP develop’s a resolution plan.
The fourth step is more of a continuous step, wherein the RP on periodic basis Evaluate the state of the physical assets. The step is essential in case the debtor organisation goes in for liquidation the assets are expected to bring relief to the creditors.
Technology integration in CASE
Indian economy is often said to be driven by IT sector. The new technologies have transformed the way India works, but it’s inclusion in the processes such as Insolvency, is yet to be configured. The IBC mentions the presence of IT infrastructure but is limited to arranging meetings for Committee of creditors (COC). IBC also mentions establishment of Information unit(IU) which can assist RP’s but the IU’s will work on macro level.
For an individual RP, a technological silo’s can also be implemented in order to ease up their work. There are various such technological advancements that are readily available, which could be handy. As an example, mobile phones, now an integral part of our lifestyle, can assist in CASE process. While consolidating the assets information, the information may be collected in form of photographs, easily clickable through mobile camera. These photographs can further assist in acquiring the assets as well as can help with clear communication to COC.
When it comes to securing the physical assets, a common practise is to rely on the on ground security service providers. The option is an effective one, till the time it is honestly applied. In order to ensure that there is security present on the ground and number of security guards is as expected, the technologies such as GPS can be helpful. The GPS data can provide us the information such as the time the person entered the location, the time of leaving, as well as their current location. The next step of evaluation can again put use of photographs clicked at the site on time to time basis. This will create a system of constant monitoring of assets ensuring asset security.
Mobile phones nowadays have both camera as well as GPS services, ensuring that no extra hardware is required to implement such a system. There are applications such as Saralweb which gathers such information and complies it in readable MIS reports, providing a transparency.
The RP’s are engaged in managing remote sites and multiple locations. Inclusion of technology can play vital role in providing clear on ground picture. Moreover, investing in a technology which can cut down expenses such as travel expenses incurred in the CASE process. The digital reports are easy to access and introduces high level of transparency for both RP as well as COC. The numerous benefits of technological advancements do not seek advocacy, but in the manner India is riding towards digitalisation, it would be safe to say that inclusion of technology is on the cards for the betterment.