Treatment of Public Equity Shareholders under IBC – By Adv. Abhishek Arya and CS Gagan Bajaj

In November last year, the Securities and Exchange Board of India (SEBI) has come up with a proposal to protect the interests of public equity shareholders in the case of listed companies undergoing the Corporate Insolvency Resolution Process (CIRP). There is currently no distinct division between equity shareholders under Insolvency & Bankruptcy Code (IBC). Since all equity shareholders are regarded as owners of the insolvent business, they are placed last in the "distribution waterfall." Also, the Committee of Creditors (CoC), which is made up of financial creditors, runs the CIRP with no input from public equity shareholders.