Undertaking Due Diligence And Its Challenges – A Perspective In The ‘IBC' Regime

It has been more than three years since the enactment of the Insolvency and Bankruptcy Code, 2016 ("IBC"), which has generated a positive impact on the distressed Merger and Acquisition ("M&A") space where many sensed an opportunity to acquire assets. This is evident from data published by the Insolvency and Bankruptcy Board of India which highlights the significant surge in the sale of distressed assets comprising 12% of the total M&A¹. The said surge is contributed by the companies in the sectors of steel, power, real estate and infrastructure². Having said that, undertaking due diligence on these distressed assets remains a challenge, even today. One of the main reasons is the nature of the asset itself being distressed, one would not any kind of information or access. This, in turn, would lead to the derailment of the resolution of a clutch of assets. The recent example being the case of Amtek Auto (with its subsidiaries like Metalyst Forgings and