An asset management company primarily created to take over half the dud loans of Peoples Bank will come with a bite that is stronger than the bark.
According to a draft new law, companies that owe more than half their debts to the AMC can be taken over and run or liquidated by a special administrator.rn
rnThe powers under the proposed Act will also prevent debtors from delaying recovery actions through the courts.rn
rnThe AMC will initially take over about Rs. 12 bn in dud loans from the Peoples Bank.rn
rnThough the AMC was originated to help the Peoples Bank the draft Act does not specifically limit the ambit of the AMC to Peoples Bank. rn
rnAny bank that is insolvent or has less than 75 percent of the required capital may be designated to come under the AMC Law. rn
rnThe Law also gives powers appoint a special administrator to run a defaulting company if it is unable or unwilling to repay the loans.rn
rnIf the restructuring plan of the special administrator is not effective, the debtor c