Page 29 - Banking Finance July 2019

ARTICLE

project) than the original proponent and then the original Experts looking to the advantages of Swiss
proponent would be allowed to counter it.
Challenge Method advised to include the same
in provisions of IBC 2016
States Initiative
‘Swiss Challenge Method’ is a new process of giving
To harness private sector initiatives for the development of
government contracts and acquisition of stressed companies
the states the system has been adopted by many states.
under Insolvency and Bankruptcy Code (IBC). In this method,
Madhya Pradesh government has decided to adopt the
any person with credentials can submit his bid to the
"Swiss challenge system" in infrastructure creation. Under
government for the development proposal or for the
which initially only the projects relating to the state Public
acquisition of an insolvent company under IBC. Bids received
Works Department (PWD) will be within the ambit of the
will be made online and the highest bid would be declared.
system. The Andhra Pradesh government is also going to
The other bidders would be given a chance to improve their
adopt the Swiss Challenge method for selection of a
bid in order to beat the highest bid.
developer for the Outer Ring Road (ORR) project of
Hyderabad.
On receiving the revised bids, the expert committee will
accept the best proposal and the original proposer will
Wherein, the criteria being kept as whichever company or
further get a chance to improve their original bid. In case
consortium pitches for less land will emerge as the successful
the original proposer is not able to match the more
bidder. The Uttaranchal government has also decided to
attractive and competing counter proposal, the project will
develop the Sitarganj Industrial Estate in the State with
be awarded to the counter-proposal.
private sector participation on a Swiss Challenge Approach
basis. Even the Indian giant Tata group is under going
In an effort to curb the crab mentality among litigious
through negotiation with the Bangladesh government over
bidders to acquire stressed assets under the Insolvency and
three issues-gas pricing, power tariff and fiscal incentives.
Bankruptcy Code (IBC), banks, in a proposal to the Ministry
The government negotiators from Bangladesh are adopting
of Corporate Affairs, have suggested that bidding under the
the Swiss Challenge system under which they will try to lure
'Swiss Challenge Method' be incorporated into the Code.
away third parties to make better offers.
Under the 'Swiss Challenge' method, the highest (H1) bid in
Swiss Challenge Method of Bidding in the first round of bidding becomes the base price for
bidders, including the H1 bidder, to place counter-bids in the
Insolvency and Bankruptcy Code
second round of bidding.

The stressed asset will go to the
highest bidder in the second round. If
no other bidder is able to better the
H1 bid, the top bidder in the first
round is declared the successful bidder.

This assumes significance in the wake
of recent proceedings related to
Binani Cements, where UltraTech has
offered to increase its bid after Dalmia
Bharat was declared the top bidder.

A senior public sector bank official said
banks have proposed the 'Swiss
Challenge Method' to the Ministry to

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