https://v2.webnotes.in/tags/illiquid-asset-workout-mf/Recent content in Illiquid-Asset-Workout-Mf on WebNotesHugoen-INTue, 19 May 2026 00:00:00 +0000https://v2.webnotes.in/illiquid-asset-workout-mf/Tue, 19 May 2026 00:00:00 +0000https://v2.webnotes.in/illiquid-asset-workout-mf/<p><strong>Illiquid asset workout</strong> refers to the AMC&rsquo;s operational process for resolving mutual fund scheme holdings that have become difficult to value or sell, particularly in stressed credit scenarios. The framework provides AMCs with options for orderly resolution rather than fire-sale liquidation.</p> <h2 id="workout-playbook">Workout playbook</h2> <h3 id="step-1-identify">Step 1: Identify</h3> <ul> <li>Periodic assessment of holdings.</li> <li>Flag instruments with deteriorating credit, low liquidity, or stressed issuers.</li> </ul> <h3 id="step-2-mark-down">Step 2: Mark down</h3> <ul> <li>Apply valuation adjustment.</li> <li>Use <a href="https://v2.webnotes.in/mutual-fund-valuation-agencies/" rel="nofollow">mutual fund valuation agencies</a> for fair-value computation.</li> </ul> <h3 id="step-3-resolution-options">Step 3: Resolution options</h3> <ul> <li><strong>Negotiated settlement</strong>: Direct engagement with issuer.</li> <li><strong>IBC resolution</strong>: Insolvency and Bankruptcy Code process.</li> <li><strong><a href="https://v2.webnotes.in/side-pocketing-introduction-2018/">Side-pocketing</a> </strong>: Segregate from main portfolio.</li> <li><strong>Asset sale</strong>: Liquidate at market-clearing prices.</li> <li><strong>Hold-to-maturity</strong>: For some debt instruments.</li> </ul> <h2 id="notable-workouts">Notable workouts</h2> <ul> <li>Franklin Templeton six-scheme situation (resolved through gradual liquidation, full investor recovery by 2022-2023).</li> <li>IL&amp;FS exposure (multiple AMCs, IBC resolution).</li> <li>DHFL exposure (Piramal acquisition resolved).</li> </ul> <h2 id="sebi-oversight">SEBI oversight</h2> <p>SEBI requires:</p>