Distressed Asset Advisory India: The Process, Start to Finish
The mechanics of Distressed Asset Advisory India are what clients ask about once they have decided to proceed. The questions below are the ones raised most often in practice; the full scope of the service is on the Distressed Asset Advisory India page.
What is Distressed Asset Advisory, in plain terms?
It is CA-led advisory support to anyone dealing with a financially distressed company or asset in India — whether you want to acquire it, you are the lender trying to recover value, or you are the promoter trying to navigate the process. It covers evaluating the real financial position of a distressed business, structuring how an acquisition or resolution plan should work, and helping you choose between the different legal routes available — insolvency resolution under the IBC, SARFAESI enforcement, or a negotiated settlement.
In practice: A frequent mistake is a bidder falling in love with a distressed opportunity's headline asking price before understanding the gap between book value and what is actually realisable. We start every mandate by closing that gap first.
How long does a typical IBC resolution take, from admission to a sanctioned plan?
Before the 2026 amendments the Code prescribed an outer limit of 330 days from the insolvency commencement date, including any time spent in legal proceedings, for the CIRP to conclude — either with an approved resolution plan or a move to liquidation. The Insolvency and Bankruptcy Code (Amendment) Act, 2026 (assent 6 April 2026) introduces tighter timelines, for example a 14-day period for the NCLT to admit or reject a Section 7 application, so confirm which provisions are in force and which timeline applies to your case. In practice, litigation, resolution plan revisions, and NCLT bench workload frequently extend cases well beyond this statutory outer limit, and courts have permitted exceptions in specific circumstances. We advise clients to plan around a realistic range rather than the statutory ceiling alone.
In practice: Resolution timelines can vary widely, and longer ones are often driven by litigation between competing resolution applicants or challenges from dissenting creditors. Timeline risk should be explicitly priced into any bid economics.
What is a Committee of Creditors (CoC) and how does it decide on a resolution plan?
The Committee of Creditors comprises the financial creditors of the corporate debtor, and it is the body empowered under the IBC to approve or reject resolution plans, approve the resolution professional's key decisions during CIRP, and determine whether to extend the process or move to liquidation. A resolution plan requires approval by not less than 66% of the voting share of financial creditors on the CoC to be approved and submitted to NCLT for sanction.
In practice: We advise bidding clients to understand the CoC's composition and each major creditor's likely priorities early — a plan that satisfies the largest secured lender's recovery expectations but ignores smaller operational creditors' concerns can still stall at the voting stage.
What happens to existing employees and workmen dues in a resolution plan or liquidation?
Workmen's dues for a specified period rank with a defined priority in both the resolution plan waterfall (as part of the Section 30(2) fair-and-equitable requirement) and the liquidation waterfall under Section 53. A resolution plan must provide for the payment of insolvency resolution process costs, and payments to operational creditors including workmen, in a manner not less than what they would receive in liquidation. Beyond the statutory minimum, the resolution applicant's approach to retaining or restructuring the workforce is a commercial decision built into the plan.
In practice: We flag the workmen dues and priority payment requirement early in plan structuring — an otherwise attractive bid can be rejected by the CoC or challenged later if the statutory minimum protections for operational creditors and workmen are not properly built in.
How is a distressed asset valued differently from a healthy business?
Under IBC regulations, two Registered Valuers independently compute the liquidation value and the fair value of the corporate debtor for the CoC's use — these are distinct, prescribed methodologies, not the standard DCF-and-comparables approach used for a healthy business valuation. For a resolution applicant's own internal purposes, valuation typically layers a realistic going-concern earnings forecast (net of the turnaround investment required) on top of the statutory figures, since the price a bidder is willing to pay reflects future potential, not just the distressed present.
In practice: We build our own resolution-plan-value model independent of the statutory RV figures — the RV's job is to inform the CoC's baseline, not to tell a specific bidder what the asset is worth to them given their own turnaround plan and cost of capital.
What is a one-time settlement (OTS) and when does it make sense instead of a formal process?
A one-time settlement is a negotiated agreement between a borrower and a lender to close out an outstanding loan for a lump-sum amount, typically less than the full outstanding balance, in exchange for the lender releasing its claim. It avoids the cost, time, and value-erosion risk of a formal SARFAESI enforcement or IBC process for both sides, provided the lender assesses the OTS recovery as comparable to or better than the realistic recovery under a formal process, net of time value and litigation cost.
In practice: We build the comparative recovery analysis for both borrower and lender clients — an OTS only makes commercial sense if it beats the realistic (not best-case) alternative recovery under SARFAESI or IBC, and we quantify that comparison rather than negotiate on instinct.
Can a foreign or UAE-based investor bid for a distressed Indian company under IBC?
Yes, subject to Section 29A eligibility and FEMA's foreign investment rules applicable to the sector. A foreign resolution applicant's equity infusion under an approved resolution plan is generally treated as FDI and must comply with the RBI's FDI policy and reporting requirements (including FC-GPR reporting on the RBI's FIRMS portal within 30 days of allotment; confirm the current reporting route and timeline), with sector-specific caps and conditions applying exactly as they would in a non-distressed acquisition. PNPC's Dubai office can support UAE-based investors evaluating Indian distressed opportunities alongside our Chennai, Bangalore, and Hyderabad teams.
In practice: Foreign resolution applicants sometimes assume IBC approval alone clears the transaction — it does not override sectoral FDI caps or approval-route requirements. We map the FEMA overlay onto the IBC bid strategy from the outset for every cross-border client.
What is the Committee of Creditors' 'fair and equitable' standard for a resolution plan?
Section 30(2) of the IBC requires a resolution plan to provide for payment of insolvency resolution process costs in priority, minimum payments to operational creditors and dissenting financial creditors not less than what they would receive in a liquidation scenario, and to be otherwise in compliance with applicable law. The CoC exercises significant commercial discretion in approving a plan that meets these statutory minimums, and courts have generally been reluctant to interfere with the CoC's commercial wisdom once the statutory floor is met.
In practice: We stress-test every plan against the liquidation-value floor for each affected creditor class before submission — a plan that technically meets the floor but leaves little margin invites objections and delay at the NCLT sanction stage.
How does distress at an Indian group entity affect its UAE operations, or vice versa?
Where a group has both Indian and UAE entities, distress in one jurisdiction can have cross-border implications — inter-company guarantees, intercompany receivables that become impaired, and lender exposure that spans both jurisdictions through cross-default or cross-guarantee clauses in financing documents. UAE insolvency and restructuring law (including Federal Decree-Law No. 51 of 2023 on Financial Restructuring and Bankruptcy, which took effect on 1 May 2024 and repealed the 2016 law) operates independently of India's IBC, and a resolution or restructuring in one jurisdiction does not automatically bind creditors or proceedings in the other.
In practice: Our Dubai office and India teams coordinate directly on cross-border distressed situations — reviewing intercompany guarantee exposure, mapping which creditors sit in which jurisdiction, and sequencing the Indian and UAE-side actions so one does not blindside the other.
Where this sits in the wider engagement
Distressed Asset Advisory India rarely arrives on its own. The statutory basis and the current requirements are set out on the Distressed Asset Advisory India service page, and the related services are grouped under Corporate Finance.
What PNPC does
PNPC Global has practised since 1986 across India and the UAE. On Distressed Asset Advisory India we take the work end to end — reviewing the facts, preparing and filing what is required, and dealing with the authority through to closure.