Edwin Wong an international investor has highlighted the ample opportunity offered by the bankruptcy system overhaul ongoing in India.
Wong is the chief investment officer of SSG Capital Management which is based out of Hong Kong. and an ex-Lehman Brothers Holdings Inc. banker.
The Reserve Bank of India recently introduced fresh changes to the system with a time line for the banks to reorganize bad loans and has banned older methods.
Change In Approach To Bankruptcy
The Indian government has been taking a number steps in an effort to clean up $210 billion of bad loans that are currently on the country’s banks’ balance sheets which has attracted global funds.
Wong called it an “once-in-a-lifetime opportunity.”
India introduced the new insolvency and bankruptcy code in 2016, and under it, 12 major debtors named the ‘dirty dozen’ have been ordered to through the bankruptcy courts .
The rules have shifted the balance towards the creditor away from the borrower, which has created more accountability for the family owners of the country’s major companies, billionaire Uday Kotak said.
An Attractive Opportunity
Wong said that one the reasons for the international attention is that there is now “a timetable” for the bankruptcy process. He said that if the Indian government sticks to what it has promised, “things have to happen.”
According to Wong, “well-positioned investors” will able to profit in this scenario.
SSG Capital has raised around $2.5 billion via secured lending and special situations Wong said, adding that India was one of the firm’s core markets.
Damien Whitehead, partner at Ashurst also echoed his view, stating that some of the large companies in distress such as mobile phone operator Reliance Communications Ltd. and steel companies were in particular attracting the attention of global investors.
Naomi Moore, financial restructuring partner at Akin Gump Strauss Hauer & Feld LLP noted that the new bankruptcy regime had created “a buzz” for distressed investors but pointed out that much of it still needs to be tested out .
