The debt-ridden economy of India found a worthy messiah, when upon the recommendation of the 2nd Report of the Committee on Banking Sector Reforms circa 1998 (Narasimham Committee II), Asset Reconstruction Companies (ARCs) were set up1. In a nutshell, these ARCs take over Non-Performing Assets (NPAs). That is to say, NPAs and bad debts, in general, are alleviated from the balance sheets of Banks and Financial Institutions at a discount and then it is upon the ARCs to bind themselves to the arduous task of recovering them.
However, as times have progressed, so has the landscape of debt and recovery. With the inception of the Insolvency and Bankruptcy Code, 2016 (IBC/Code), recovery has been ditched for resolution2. Naturally, ARCs would also wish to partake in the same. Under the working mechanism of the IBC, ARCs have been given an inherent green light to enlist themselves as Resolution Applicants and Co-Resolution Applicants under Section 29A3. That being said, herein lies a major conflict.
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