WHY DISTRESSED M&A IS BECOMING A STRATEGIC ROUTE FOR CORPORATE ACQUISITIONS IN INDIA

Distressed mergers and acquisitions (M&A) are gaining strategic relevance in India's corporate acquisition landscape by enabling investors to acquire financially troubled businesses that retain valuable operational assets and commercial potential. The Insolvency and Bankruptcy Code, 2016 (IBC), has contributed to this development by establishing a structured mechanism for corporate resolution, facilitating ownership transitions and providing greater certainty regarding historical liabilities. This article examines the commercial and legal considerations driving distressed acquisitions in India, particularly access to established industrial capacity, potential acquisition-cost advantages, creditor recovery and opportunities for operational restructuring. Drawing upon Tata Steel's acquisition of Bhushan Steel, it illustrates how financial distress can create opportunities for strategic expansion. The analysis further considers the legal protections arising from approved resolution plans under Section 31 of the IBC, the conditional safeguards under Section 32A, and relevant Supreme Court decisions concerning the treatment of pre-resolution liabilities. The article also addresses the limitations of distressed acquisitions, including litigation risks, uncertain contractual rights, operational deterioration and evolving insolvency regulations. It argues that distressed M&A should be understood not as a demonstrated substitute for conventional acquisitions, but as a strategic route through which financially distressed yet commercially viable enterprises may be revived.