tag:blogger.com,1999:blog-19649274.post1759654901662931512..comments2020-02-20T00:06:08.502+05:30Comments on The Leap Blog: Indian bankruptcy reforms: Where we are and where we go nextAjay Shahhttp://www.blogger.com/profile/03835842741008200034noreply@blogger.comBlogger1125tag:blogger.com,1999:blog-19649274.post-66226367622316200762016-05-24T22:51:50.882+05:302016-05-24T22:51:50.882+05:30Having learnt about and understood bankruptcy in s...Having learnt about and understood bankruptcy in shipping in the great maritime recession of the &#39;80s as a very young seafarer shoe-horned into commercial simply because I could write and type well, I find this the key sentence in your analysis wrt India - &quot;This is not how India understands limited liability today. We tend to think that a company belongs to its founding family no matter what happens by way of firm default.&quot;<br /><br />In the &#39;80s, Indian flag shipowners who went bust took everybody down with them, and the ships were eventually sold as junk and scrap. On the other hand, shipowners from countries where people were used to moving fast when going bust, sold their ships and every other asset they had including their personal paintings and antiques, just so they could keep their global reputations intact and rise again.<br /><br />I myself worked for a short while for a HK operator, and the honesty with which he handed over ships to new buyers even when he was going downhill rapidly, was the reason why within a few years when he read the tea-leaves properly, he was right back in the middle of things, and is today amongst the biggest in the world. <br /><br />The other point I want to get across is that if even a couple of cases where bankruptcies result in smooth transitions are going to happen very soon then there is a signal sent out to others. Legal tangles delaying matters is another aspect - if people have to pay their legal fees from their own personal pockets and not stick them to their sinking companies which they control, then the legal tangles may not last as long.<br /><br />Finally, within Indian realities, my submission is that bankruptcies are often planned events, right from the start, NPAs and therefore bankruptcies are planned events just like are insurance frauds. A criminal forensic element needs to be strongly introduced into investigating such bankruptcies, too, because this usually includes the complete chain of players and not just the promoters.<br /><br />Humbly submitted.V Mhttps://www.blogger.com/profile/11317919345949931724noreply@blogger.com