New Delhi: A liquidator won’t be allowed to combine the proceeds from the sale of assets of a bankrupt company with its liquid assets such as cash deposits to calculate fees for their services, the insolvency regulator has clarified in its latest order, suggesting any such practice inflates the remuneration and isn’t in sync with the regulations.
It has also asked those liquidators who have charged the “excess fees” based on the inflated calculation to return the extra amount.
“Amount realised’ means an amount that is being realised from the sale of an asset where the asset changes form. Where the asset is already liquid such as cash and bank balance, including term deposits, mutual funds, and quoted shares, there is no ‘realisation’, and funds are readily available for distribution. The amount realised, thus, implies the proceeds from the sale/realisation from the liquidation of assets which are not liquid,” the Insolvency and Bankruptcy Board of India (IBBI) said in the order dated September 28.
