Distressed Mergers & Acquisitions: A Recent Trend in Corporate Sector in India

Distressed M&As are not new to the Indian economy. In a distressed M&A, both investors and sellers have a lot of research, procedure, and due diligence to undertake in a much shorter amount of time.
By: Kashyap Partners & Associates LLP
GURGAON, India - June 18, 2021 - PRLog -- Mergers and Acquisitions (M&A) have captivated the business sector all over the globe. India is no exception when it comes to mergers & acquisitions. After the elimination of restrictive policies and liberalization of the Indian economy, the M&A culture in India exploded. M&As are strategic measures used to propel economic growth. This has been accomplished by expanding into low-cost or developing areas, particularly those with a surplus of skilled labor, or by purchasing well-established corporate organizations. M&A culture has been dominant in India since 2015 and has only risen in popularity over the years. Unfortunately, not every M&A transaction is carried out with equal liberty for the parties. Some of the M&A transactions are hit-and-run situations, where there is centralization of power with the acquirer, an easy target, and a profit-making arrangement.

The Insolvency & Bankruptcy Code, 2016 (IBC) had been enacted with the primary goal of reorganization, resurrection, and protecting the interests of shareholders. It has constrained the bounds of the former regime where it was non-existent. The modern Insolvency and Bankruptcy Code, 2016, has replaced outdated legal frameworks regulating the rehabilitation and liquidation of incorporated or unincorporated enterprises. The previous system concentrated on the dissolution of corporate bodies to discharge debts, which did little or no help. The IBC, on the other hand, focuses on the continuation of the company as a going concern. This law concentrates on reviving ailing industries to the best of its ability, the code's primary goal, and liquidating the same if resurrecting is not feasible. In the case of Swiss Ribbons Pvt. Ltd. v. Union of India, the Supreme Court confirmed the legality of the Insolvency and Bankruptcy Code after considerable discussion and debate, this opened up a whole new dimension in the distressed M&A arena has been made available.

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Tags:Mergers Acquisitions
Location:Gurgaon - Haryana - India
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