MERITS OF THE INSOLVENCY AND BANKRUPTCY CODE, 2016 - The Daily Guardian
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MERITS OF THE INSOLVENCY AND BANKRUPTCY CODE, 2016

The IBC, despite its shortcomings, is an impressive substitute to the earlier insolvency resolution process in India. The new Code has not only streamlined the process, but also provided a time-bound one-stop solution to the parties involved.

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The Insolvency and Bankruptcy Code (IBC), 2016, (or the Code) a law enacted to consolidate the framework of existing insolvency and bankruptcy laws, will be turning five years old. With its fifth anniversary coming up on 28 May 2021, it would be appropriate to have a bird’s eye view of its functioning.

PROCESS OF INSOLVENCY RESOLUTION UNDER IBC

Firstly, the Code has been able to bring down the average days of resolution of an insolvency issue from 1500 days to 380 days! As per the IBBI, the code has resulted in a whopping 191% realization to financial creditors as compared to liquidation value. Till date more than 250 companies have been revived and 4008 insolvency applications have been filed, of which 277 proceedings have been concluded under CIRPs and 1025 companies were sent to liquidation. The total financial realisation is Rs.1.90 lakh crore (till September 2020). But this is not the real story here. The real story is about how more than 250 companies have been revived and a lifeline extended to thousands of operation creditors, thereby preempting thousands of job losses and NPAs, and preventing lakhs of crores of rupees in losses for the economy. The Code has also helped India rise from the 130th to the 63rd rank in the global ease of doing business ranking. Still, this is just the tip of the iceberg, with many benefits to follow.

Prior to the introduction of the IBC, 2016, the process of resolution of insolvency cases was scattered, interminable, desultory and un-economical. The fact that the IBC was introduced by repealing two Laws and amending 11 others shows how many laws governed the insolvency proceedings. The Code has streamlined the process, made it time-bound and provided a one-stop solution.

Needless to say, the primary objective of the Code is to revive distressed debtors. The Code represents the singular shift in business regulatory laws: from retroactive to proactive, from post mortem dissection to proactive revival of business. It recognises ‘insolvency’ as a state where assets are insufficient to meet the liabilities, and understands that an untreated insolvency will lead to ‘bankruptcy’ (non-corporates) and ‘liquidation’ (corporates). To prevent this, the Code provides for a time-bound insolvency resolution process, to be completed within 330 days, including any litigation. However, due to delay in court processes, in reality the average number of days is around 380 days.

FOUR PILLARS OF THE CODE

The IBC, 2016 is based on a four-pillar institutional framework, comprising

• NCLT and NCLAT, the adjudicating authority,

• Insolvency and Bankruptcy Board of India, the regulator of insolvency professionals and insolvency professional agencies,

• Insolvency professionals, the class of regulated persons responsible for the efficient execution of the processes specified under IBC, and

• Information utilities, the new industry to electronically store facts about lenders and terms of lending.

BENEFITS OF IBC

The IBC successfully remedies several shortcomings of the earlier insolvency resolution process, such as

• Timely resolution of insolvency process

The process of resolution is carried out in a time-bound manner, the business is transferred as an ongoing concern to the resolution applicant, thus ensuring nil loss to the economy due to stoppage of production or under-utilization of resources, and minimum loss of employment, revenues to government, local ecosystem and ancillary industries.

• Certainty and clean title

When insolvency is resolved through the Code, there is a certainty in the settlement of liabilities and ownership of assets. Since all liabilities including government dues are settled, the resolution applicant is vested with a clean and litigation-free business and assets, etc.

• Prevents fraudulent activities by debtors

Since the ownership and control of the business entity, its assets and business activities stand transferred from the debtor to an insolvency professional as soon as an application is admitted by the adjudicating authority, the debtor is preempted from indulging in any activity to defraud the creditors.

Contrast this with the situation before, when the debtor continued to have control on business activities and assets, which enabled them to drag his feet, cause a delay by litigating endlessly, while fraudulently disposing off assets to defraud creditors, employees, government, etc.

• Relief for bona fide debtors

Prior to the IBC, the liabilities that remained unpaid after proceedings continued to haunt the debtors for the rest of their lives. However, resolution through the Code guarantees final settlement of all liabilities, thus freeing the bona fide debtors from debt traps and government liabilities.

SO, IS THE CODE AN UNQUALIFIED SUCCESS?

Certainly not; there sure are some shortcomings too. Though the Code, 2016 is an adequate and efficacious law, there are some shortcomings that hinder its effective implementation.

• Non-execution of the process in set time frame

The raison d’êtreof the Code is a time-bound conclusion of proceedings and delivery of settlement. However, the lack of a supporting ecosystem makes it a difficult task. Resistive forces, too numerous to name here, cause significant delays in a time-bound execution.

• Lack of coordination between parties involved

Time and again, a lack of coordination between the parties in the process (creditors, stakeholders) is encountered which delays and stymies the insolvency proceedings.

• Inexperienced insolvency professionals

Since the Code and its prescribed procedures are new, understandably, the insolvency professionals, advocates and adjudicators lack experience, which causes significant delay in resolution proceedings. At times, due to this lack of experience, a company which could have been revived ends up liquidated.

• Overburdening of courts

As the number of NCLTs and NCLATs are limited, they are weighed down by a deluge of applications, naturally impeding the timely conclusion of proceedings. Thus it is time to double the number of benches of both the NCLT and NCLAT.

• Threshold increase disadvantageous to operational creditors

During the Covid-19 period, the threshold for applications under the Act was suddenly raised from Rs. 1 lakh to Rs. 1 crore. No doubt, the threshold of Rs. 1 lakh had been too small, but the arbitrary jump to Rs. 1 crore was extreme. It leaves a large section of operational creditors in a lurch. Such a jump may prove detrimental to the very purpose of the Code; instead, a gradational or incremental jump in threshold is advised.

CONCLUSION

In a nutshell, the Code is a more fecund substitute to the earlier inadequate and defeasible insolvency resolution process. A success story related to the Code will be discussed in the next part of this article.

Sreenivas Bidari is a senior IRS officer hailing from Karnataka. Ranjit Kejriwal is an FCS and Registered Valuer (SFA). The views expressed are personal.

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NEED FOR FAMILY OFFICES TO WORK TOGETHER UNDER A CO-INVESTMENT STRUCTURE: JAHNAVI KUMARI MEWAR

Jahnavi Kumari Mewar, CEO and Senior Portfolio Manager at Auctus Fora, talks about her business firm along with insights on internationalism, effective global governance practices and the way forward in the post-Covid world.

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Jahnavi Kumari Mewar recently joined NewsX for an exclusive conversation as part of NewsX India A-List. In the exclusive conversation, she spoke to us about her business firm along with insights on internationalism, effective global governance practices and the way forward for the post-Covid world.

Jahnavi commenced her talk by speaking about the creation of Auctus Fora and its uniqueness. She said “Auctus fora was born with a need to work with family offices (preferably) without a fund structure in place. If I take a small step back, I initially worked for JP Morgan from where I decided to set up a boutique investment bank and as that business developed and progressed, I had developed very meaningful relationships with family offices globally. We found that there was a significant need for family offices to work together under a co-investment structure rather than that of a fund. Moving on we decided to set up a co-investment platform, entirety focused on private acuity and private structure credit working with family offices globally. It’s a unique model because we work on the ‘reverse origination methodology’ developed in 2011. We use this methodology to make investment decisions and direct our investment philosophy.”

When asked about how pandemic months have been for her and her firm, she responded “I think based on facts that firstly we are directed to an asset. Secondly, we don’t do listed securities and are a private acuity focused and private structure credit that organically gives you a lot more control over your investment decisions. I am very rigid when it comes to the investment decision making process. For example, we’ll never chase dues or get into a bidding war as I believe that if you get your buying price wrong then you already made a big mistake in terms of capital allocation and investment process. In such disruptive times when others have faced upheavals, we have ramped up because of our decent decision making. Based on that what we have done over the past 15 months is that the assets which we felt will continue to give long term returns and are relatively resilient to the disruptions caused by global pandemic and lockdown, we have reinvested capital or added additional capital into those assets and portfolios. So, at a macro level, we have reinvested capital into our portfolios and at a micro level, into select asset portfolios. I mean not to say that we haven’t felt pain but we have been more resilient.”

Explaining the post-Covid global economic changes, she expressed, “What we are seeing globally is an unprecedented crisis for which a lot of nations have lacked institutional memory because they have never experienced something like this before. In the absence of institutional memory, there is institutional unpreparedness. I think that the responsibility and accountability of this crisis don’t solely sit with the current government because there have been decades of under-investment in the public healthcare infrastructure. Instead, the present government has put concentrated efforts towards formulating new public policies. It is my personal opinion that unfortunately, the government lacks sophistication in its policymaking. Therefore they come across significant opposition to their policies.”

When it comes to changing global supply chains, Jahnavi described “let’s look at global supply chains from both political and economic perspectives. Politically speaking, we have fallen short on collective action and there has been a crisis of global governance. Supply chains and global governance can work hand in hand. A good small scale example is of QUAD members who have been working together and have been multilaterally more effective. So when we talk of re-engineering global supply chains, we have to look at from the perspective that are we going to create an incentivising engagement that affects better global governance practices.”

Lastly speaking about the importance of institutions like QUAD as representative of the changing world over institutions like UN and WHO, she said “QUAD is a great example of a force for global good. WHO has been less effective than QUAD as it has been dispersing contradictory information globally, it along with the UN have failed to garner collective action for a global solution to the pandemic. QUAD is a representation of the way forward. We need to re-engineer a pragmatic form of internationalism which meets the needs for today and future.”

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INDIA-BORN SINGER FEATURES ON UK’S BBC RADIO

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The latest composition of the Indian born, London-based singer Saisha Hayes’s ‘One Way ticket’ was selected by UK’s BBC Radio to be played on its platform on Monday night.

At 20, she is among the youngest singer-songwriters to feature on BBC radio and her song was selected among the pool of well-established names.

BBC Radio 1 Leeds chose Saisha’s composition under the “Best modern Asian fusion music”. While the words of the song have been penned by her, the music has been composed by Rohit (Foenix). The song, sung by Saisha, had earlier featured on the coveted ‘Rolling Stones’ India hitlist.

She is a second-year student of King’s College, London and the granddaughter of Hindi literary giant and former IAS officer Bhagwati Sharan Mishra, who passed away last month.

The song is being played on all major music platforms including Spotify, Amazon Music, and YouTube.

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IT’S TOUGH FOR PLAYERS TO STAY IN A BIO BUBBLE, SAYS MURALI KARTIK

In an exclusive conversation with NewsX India A-List, former cricketer Murali Kartik talks about his lockdown experiences, how he felt being part of the IPL in a bio bubble, and much more.

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Murali Kartik, a former Indian cricketer and a popular figure in commentary, is well-known for his slow left-arm orthodox bowling. Having charmed cricket lovers across the world with his bowling skills, Murali Kartik recently got recognised by NewsX India A-List for excellence in Cricket. Joining us for an exclusive conversation, he spoke about his lockdown experiences, how he felt being part of the IPL in a bio bubble and much more.

Speaking about his emotions and experiences during the second wave of Covid-19, in the wake of which IPL was first postponed and later stopped in middle, Murli said, “Pandemic has been a tough one for everyone but more so for people on the ground. We were actually much protected as a commentary team. With that point of view, we didn’t have many problems but I can imagine teams travelling and engaging in contracts would have been tougher amid the pandemic.”

“Since last year, I got the feeling that as soon as a little bit of unlocking starts people got careless. It is our responsibility to make sure that we don’t go out till the time we aren’t needed to go out. Most important of all is we should all be happy in our homes and not feel entrapped into them. We can only control the controllable,” he added.

When asked about the concept of bio bubble, especially in cricket, which is a contact game, Murali responded, “People in bio bubble is never easy. We need to return to normalcy. We all are missing luxuries of life which are not to go around in expensive restaurants but to simply move around with freedom and without a mask; meet our people without the fear of either contacting with the virus or passing it to someone else. That is the normal luxury. From a sports point of view, it’s tough for players to stay in a bio bubble. There’s a life beyond a sport. Hopefully, we come back to normalcy soon.”

Speaking about what the players have missed out in almost past two years of time is very evident now, he said “Unfortunately, it’s same for everyone. People who had to write exams are unable to do it and are sitting home. For sportspeople, the Olympics has been postponed and rescheduled. So, imagine all the athletes, who worked so hard for it. We come back to the same thing that it’s for everyone. Now it is about mental strength and controlling the controllable. We need to be surrounded by positive people and thinking. We need to look inwardly because the easiest thing in these days is to get despondent.”

When asked about something new or novel he has picked up in the last few days, Murali shared, “To be honest, I have caught up in a lot of sleep these days at home. I am not someone who’ll sleep a lot. I have been the happiest being at home. The only thing I did in my 1st lockdown was to read Sai Suchadutta. I read it six to seven times. I have read books but apart from that I haven’t done any specific thing.”

Concluding the interview on a humorous note, he stated that he has been a couch potato watching many fun OTT programs during the lockdown. He added a funny but profound thing that we teach a dog to sit and stay but we are not able to do it ourselves.

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JUST BE AUTHENTIC AND EVERYTHING WILL FALL INTO PLACE: KARUNESH TALWAR

In an interview with NewsX, stand-up comedian Karunesh Talwar talks about his new show and more.

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Karunesh Talwar, a well-known stand-up comedian, is all set to entertain the audiences with his stand-up special on Amazon Prime Video. Recognised for excellence in entertainment, Karunesh recently joined NewsX for an exclusive conversation as part of the NewsX India A-List series. He spoke about his new show on Amazon Prime, the idea behind the name of the show, principles of stand-up comedy and much more.

Speaking about how he and the team happened to name the show ‘Aalas, Motapa, Ghabraahat’, Karunesh shared, “The name is part of joke punch line from the show itself. I had written the whole show, we shot it and while we were editing it, I was sitting with the show’s director and editor who suggested me to give the name ‘Aalas Motapa Ghabraahat’.” He added, “The first half of the show is about my parents and the other half is about my relationship with my girlfriend.”

Emphasising the relevance of these three words: Aalas, Motapa, and Ghabraahat, especially amid the pandemic, Karunesh said, “This happened subconsciously as I wrote this show during the pandemic. Also, it comes from the attempt to tell my story, which has to be really authentic and unique on stage. So these three words can describe a lot of people’s experiences during the pandemic.” On being asked to give three words to describe his last one and a half years, he jokingly said, “Aalas, Motapa, Ghabraahat. Apart from that, I think it would be lucky, motivated, and more anxious.”

When asked what makes this show different from others, he responded, “Usually you write material about certain subjects that is about eight to nine minutes per subject covering about six to seven subjects over an hour show. Here, I had only two topics. I think it is a lot more in storytelling format and in long-form. That’s not what I have attempted before. It is much more personal and vulnerable than anything I have ever done before as it reveals aspects to my personality, which people who watch my content wouldn’t have been revealed to before.”

Karunesh is hopeful that it is the sign of more things like this coming from him in the future. He expressed, “One of the principles of live stand-up comedy is that if you are authentically telling your story, then you are the only one selling it and you are the only supplier of that particular kind of comedy. So, people will always buy it from you. You’ll also never run out of material because you are being authentic and not pretending up there.”

Talking about the public response on his last Amazon Prime show’s interesting title—‘Pata Nahi Par Bolna Hai’, Karunesh said, “The response was overwhelming and I got a lot of positive feedback. The fact that I am doing another show with Amazon Prime means that the last response was good. The title of that show came about because it was about a lot of people and me at the same time.”

When asked if his family and friends call him to share some light moments in otherwise heavy days, he expressed, “I think people often have a perception that comedians are hilarious and people around them are constantly laughing. No, they are constantly irritated by our existence. They haven’t called me for light moments but definitely, the advantage is to learn about therapy and how to balance mental health better.”

Sharing his takeaway from the pandemic, Karunesh said, “To be honest, I am extremely fortunate that my career picked up at the time it did. It allowed me to access work and resources that kept me tied in these unprecedented times. This allowed me to work on myself. It gave me time to introspect, write more material, and explore new avenues in my work. This is the reason why this new show is different from the kind of work I have done before.”

On a parting note, Karunesh shared a piece of advice for aspiring comedians and said, “Delayed gratification always beats instant gratification. If you have a funny thought, don’t put it out instantly instead work on it for about six months to one year. It will give you unimaginable success and opportunities. Respect your audience, be authentic, and write and perform as much as you can.”

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We never ever tell stories of women’s rights to her own body: Seema Anand

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Seema Anand, Author and Mythologist, recently joined NewsX for an exclusive conversation as part of NewsX Influencer A-List. During the chat, she opened up about her experience of writing her book ‘The Art Of Seduction’, interest in this particular field and much more. Read excerpts:

 Speaking about her interest in this particular field and how you came about writing her book ‘The Art Of Seduction’, Seema said, “It actually began with the idea of looking for stories, so I am a storyteller by profession. I believe that stories that we tell define who we are. They actually create our identity. You know the kind of stories that we tell, if you tell stories about how if a man comes home, he is drunk he beats up his wife ,but she is so good that she never says anything to him. “Then you create the identity of a good woman as somebody who will never stand up for herself”, and to me, it’s always been a fascinating subject. As I explored these stories, I realised we never ever tell stories of women’s rights to her own body. That’s always somebody else’s property and i decided to try and see what it is that we had shut down or what is the stories that we had silenced. That led me to the kamashastras. As you know, there are hundreds of kamasutras, not just the one kamasutra. You know what, i had actually thought it was part of my studies. I thought I’ll do a paper on it. I’ll move on. I started this about 18 year ago. All i can tell you is that it is the most fascinating subject that i have ever come across because the Indian Kamashastras are the most exquisite books on erotic passion in the world and they’re so unexplored, untranslated. When i say untranslated, i don’t just mean about translating word to word, i mean about the metaphors, what they actually mentioned and what they talk about. I has become life’s mission now for me to discuss it, but what really draws me to them more and more is the emphasis that they put on a woman’s pleasure. The emphasis that they put on the divinity and the beauty around sexuality, which is so different to the world that we live in right now. It just makes me want to explore it more and see what it is that our ancient wisdom taught us that we see lost in this twilight zone that we live in today.”

 When asked how is she using her platform on social media to spread the word on, not only sexual liberation and talking up about your sexuality, but also saying that Indian culture has such a rich understanding of what sexuality is and it can be much more than vulgar, she responded, “You know its just the case , it’s anytime you have to change a story you have to do it one tiny little bit at a time. I think sex education is extremely important. I know that a lot of people in india believe that if you teach sexual education in school then it’s giving kids a license to go up and do things but actually it’s making them aware of what’s going on so that they don’t go up and do things they become more sensible or more careful or more intelligent around sexuality. It’s a very important part of our life to be intelligent and to understand sexuality, but yes coming back to question about how our culture or our background plays into it, what i find in all sex education classes is its very clinical. It’s literally being taught as the anatomy. This is this part is anatomy. This is what happens at penetration. We keep saying that sexuality and intimacy is not necessarily about penetration , that’s one act in that entire world of pleasure out there. To me, i really want to bring back the idea of pleasure as a thing of beauty and refinement, which is what the kamasutra was trying to teach. As thing of refinement, as an thing that intrinsically includes emotion, i think that’s where we are lacking. When we teach sex education or when we talk about sexuality. You know the problem is like you said it’s so taboo that in just trying to break those taboo most of us are just trying to say okay, let’s normalise the conversation. Let’s just get out there and talk about it so that it’s not hush hush and it’s not so pushed under a carpet. Most people are just literally trying to find that first battle and yeah I guess my battle has always been slightly different because as I was telling you earlier I didn’t actually start off by doing this on social media. I’ve been doing this work for so long. I just want to bring back people to the idea that there is beauty and refinement and culture around it. It’s not that one act of penetration that surrounds it, there’s so much more to it.”

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I tried to create a conversation around sexuality: Leeza Mangaldas

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Leeza Mangaldas, Sex Positive Content Creator recently joined NewsX for an insightful conversation as part of NewsX Influencer A-List. In the exclusive conversation, Leeza opened up about the content she creates on Instagram, the kind of conversations she has been having on social media and how she has been helping youngsters get relevant information about sex.

When asked about the content that she is creating on Instagram, Leeza said, “I tried to create a conversation around sexuality, sexual health, gender, the body, identity. My hope is that this can help in normalise these conversations because sex remains so stigmatised for discussion. Most young people don’t receive information. It is a normal part of life. It’s something we deserve, i.e accurate judgement about sex. The fact that most people have a smartphone now, the internet allows us to access the stuff from the comfort of our homes and privacy from our headphones and phone. It’s really lensed. I also think that young people use social media so much , I mean people don’t put the phone down. They took it even in the bathroom. So, if you want to connect to young people, social media seems like a great way to do it, but it’s so important to me to have conversation. A typical attitude to sex education is like lets teach people how not to have negative experiences. ‘Ok, so it’s very don’t do this, don’t do that and kind of fear-based approach. If you have sex, you will get pregnant. If you have sex, you will get an STD. Ohh it really really bad that if you sex you will be punished and if you done something wrong or evil,’ This kind of the messaging is there. Any official messaging intended is laced with judgement and punishment. All of this type of language, absence base, fear based or i mean, even when it is well meaning it’s like does or not to get an std or not to get pregnant. Nobody is focusing on pleasure. Nobody knows how we can have the best experience, it’s just talking about how we can not have a bad experience. You know what i mean. I wanted that shift where we talk about sex and its normal, important and wonderful thing, rather than scary bad thing.”

Talking about the topics she has been addressing via her videos, she said, “I try to also allow for audience questions to dictate the topics i choose. I got a lot of questions repeatedly around on certain thighs and addressed them. I think many people, have a lot of issues about body image. Like you know questions around penis size, questions around boobs size, questions around like why is the skin of vagina is darker than the rest of body or lots of question around first sexual experience. I have created a lot of content type of trying to provide help for full information what you should know before you have sex. You know consent is a subject that is important to me, talking also about stuff like arousals, desires and being in contact with your own body and pleasure and understanding that you can communicate better because I think communication is central to sexual experiences.”

Speaking about where she an draws a line between helping younger people to get relevant information about sex and drawing line with what is the legal age to have sex, she said, “The age of consent was vary from country to country and changed over time and it’s a really tricky area without easy answers in terms of age of consent of what is legal to begin having sex. In India, it is 18 but there was a time when it was something around 12 here. If you know, a child marriage is a part of how things operated in your grandparents’ generations. In other countries, it’s 16 and in some countries it’s still even younger than that. So, how old is appropriate or not appropriate 16, 17, 18 ,20. This is a question that doesn’t have an easy answer and it’s not up to me to decide. I’m also a citizen abiding by the laws, so of course, I maintain the age of consent. In India, it is 18 but i think the information, the education is something has to start earlier and have to start when the child is learning the first word or when he learns the body parts. For example, you are teaching him this is your eyes, your nose, you are teaching them the words to think and why is it that we never teach them the correct names of vagina, instead we say something either name like shame shame. You’re getting it, in such an age, this is shameful. So, of course, you should be appropriate but not for one-time conversation, which you have with a young person. These are opportunities to normalise education around sexuality, body, sexual health, all through childhood, because it’s usually the age 6 or seven somebody will ask mom, where do babies come from how would i get here or if you are expecting another sibling like how would it get in your stomach? Are you going to tell them that a bird dropped it or you found it in the dustbin? Why lie to the child? After there are picture books that simplify an explanation or consumptions and pregnancy, seeing things. When your adult teaches a child to get on her first periods, don’t you think they owe an explanation.”

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