1. THE INSOLVENCY AND BANKRUPTCY CODE (AMENDMENT) ORDINANCE, 2021

The Central Government has promulgated Insolvency and Bankruptcy Code(Amendment) Ordinance 2021 to allow pre-packaged insolvency resolution process ("PIRP") for corporate debtors classified as micro, small or medium enterprises under the Micro, Small and Medium Enterprises Development Act, 2006, vide newly inserted Section 54C of the I&B Code.

Some of the important features of the PIRP under the I&B Code are as follows:

  1. PIRP can be initiated wherein the maximum default value is INR 1 crore.
  2. The PIRP process shall be completed within 120 days from the pre-packaged insolvency commencement date.
  3. The moratorium shall be available from the pre-pack commencement date till the closure of the process (by approval of the resolution plan or otherwise).
  4. The control and possession of the current promoters and management shall continue to vest with the corporate debtor.
  5. PIRP cannot run in parallel to CIRP.

2. Reporting of the status of ongoing corporate insolvency resolution processes through Form CIRP 7 under IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016

Regulation 40B of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 ("CIRP Regulations") require an interim resolution professional (IRP) / resolution professional (RP) to file a set of forms (CIRP 1 to CIRP 6) within 7 days of completion of specific activities to enable monitoring progress of CIRP. However, since no form is required to be filed until the related activity is completed, hence to make the monitoring of the progress of CIRP easier, IBBI vides it is Circular dated 18th March 2021 has provided under Regulation 40B of CIRP Regulations for filing of Form CIRP 7 within 3 days of the due date of completion of any activity if the said activity is delayed, and continue to file Form CIRP 7 every 30 days until the said activity remains incomplete.

It is to be noted that subsequent filing of Form CIRP 7 shall not be made until 30 days have lapsed from the filing of an earlier Form CIRP 7.

3. Insolvency and Bankruptcy Board of India (Insolvency Professional) (Amendment) Regulations, 2021

Insolvency and Bankruptcy Board of India ("IBBI") vide Notification dated April 27, 2021, has amended Insolvency and Bankruptcy Board of India (Insolvency Professional) Regulations, 2016. It has now provided that the Insolvency Professional shall pay the fee for the financial year 2020-21 till June 30, 2021. Also, a proviso has been inserted that when an individual ceases to be its director or partner, as the case may be, on and from the date of commencement of the Insolvency and Bankruptcy Board of India (Insolvency Professionals) (Amendment) Regulations, 2021 and ending on December 31, 2021, the insolvency professional entity shall inform the Board, within thirty days of such cessation. Further, when an individual joins as its director or partner, as the case may be, on and from the date of commencement of the Insolvency and Bankruptcy Board of India (Insolvency Professionals) (Amendment) Regulations, 2021 and ending on December 31, 2021, the insolvency professional entity shall inform the Board, within thirty days of such joining

4. Insolvency and Bankruptcy Board of India (Model Bye-Laws and Governing Board of Insolvency Professional Agencies) (Second Amendment) Regulations, 2021

Insolvency and Bankruptcy Board of India ("IBBI") vide Notification dated April 27, 2021, has amended Insolvency and Bankruptcy Board of India (Model Bye-Laws and Governing Board of Insolvency Professional Agencies) Regulations, 2016.

In Regulation 12A, which provides for Authorization for Assignment:

  1. In sub-clause 5, another proviso has been inserted that states that for an application that has been received between the period of the commencement of these Amendments till 31.10.2021, if the authorization for assignment is not issued, renewed, or rejected by the Agency within 30 days of the date of receipt of an application, then the authorization shall be deemed to have been issued or renewed by the Agency.
  2. In sub-clause 7, the period for appeal to the Membership Committee by an applicant aggrieved by an order of rejection of his application by the Agency has been increased from 7 days to may within 15 days from the date of receipt of the order.

    Further, another proviso inserted provides for an appeal to the Membership Committee within 30 days from the date of receipt of order, in case an application for issue of authorization for an assignment has been rejected by an insolvency professional agency between the period from the date of commencement of these Amendments till 31.10.2021.

5. Insolvency and Bankruptcy Board of India (Information Utilities) (Amendment) Regulations, 2021

Insolvency and Bankruptcy Board of India ("IBBI") vide Notification dated April 13, 2021, has amended Insolvency and Bankruptcy Board of India (Information Utilities) Regulations, 2017. The amendments are as follows:

  1. Regulation 15(3) provides for the bye-laws for the functioning of the Information Utilities consistent with the I&B Code.

    The IBBI has inserted the following clause after Regulation 15(3)(b):

    (ba) minimum service quality standards, including timelines for - (i) registration of users,

    (ii) issuance of record of default, and

    (iii) issuance of an annual statement to registered users.

    (bb) adoption of quality standards and quality standards certifications
  2. Further, Regulation 27(1) has been substituted to provide that a user, who has submitted information in Form C of the Schedule (the Form has also been substituted by a new Form C) to an information utility, shall submit the information updated as on the last day of every month, in the first week of the following month, on the condition that information of default shall be updated within seven days of the occurrence of default.
  3. Regulation 36A has been inserted which provides for publication of quarterly statistical information by an information utility relating to debt-related information in its possession. The statistics in sub-regulation (1) shall provide the distribution of debts in terms of currency, geography, sector, size, tenor, type, lending arrangement, and incidence of default.

6. Guidelines for Appointment of Insolvency Professionals as Administrators under the Securities Exchange Board of India (Appointment of Administrator and Procedure for Refunding to the Investors) Regulations, 2018

The IBBI and the SEBI have mutually agreed to use a Panel of IPs for appointment as Administrators for effective implementation of the Regulations. The IBBI shall prepare a Panel of IPs keeping in view the requirements of SEBI and the Regulations and the SEBI shall appoint the IPs from the Panel as Administrators, as per its requirement in accordance with the Regulations.

The guidelines specify the eligibility for Insolvency Professional (IPs) to be appointed in the Panel of IPs. The following is the eligibility criteria:

  1. There is no disciplinary proceeding, whether initiated by the IBBI or the IPA of which he is a member, pending against him;
  2. He has not been convicted at any time in the last three years by a court of competent jurisdiction.
  3. He expresses his interest to be included in the Panel for the relevant period;
  4. He undertakes to discharge the responsibility as an Administrator, as and when he may be appointed by the SEBI;
  5. He has made compliance under Regulation 7(2) (ca) of the Insolvency and Bankruptcy Board of India (Insolvency Professionals) Regulations, 2016 for the year 2019-20
  6. He holds an Authorization for Assignment (AFA), which is valid on the date of expression of interest.

7. Insolvency and Bankruptcy Board of India (Liquidation Process) (Amendment) Regulations, 2021

Insolvency and Bankruptcy Board of India (IBBI) vide notification dated 4th March 2021 has amended IBBI (Liquidation Process) Regulations, 2016. As per the amendment, the liquidator shall now file the list of stakeholders with the Adjudicating Authority within forty-five days from the last date for receipt of claims. Further, the list of stakeholders shall now be filed on the electronic platform of the Board for dissemination on its website.

8. Filing of the list of stakeholders under clause (d) of sub-regulation (5) of Regulation 31 of the IBBI (Liquidation Process) Regulations, 2016

The IBBI vide Circular dated 04.03.2021 has issued the format and guidelines for the filing of List of stakeholders under Regulation 31(5)(d) of IBBI (Liquidation Process) Regulations, 2016.

Clause (d) of sub-regulation (5) of regulation 31 of the Liquidation Process Regulations inserted vide Insolvency and Bankruptcy Board of India (Liquidation Process) (Amendment) Regulations, 2021 requires that the liquidator shall file the list of stakeholders on the electronic platform of the Board for dissemination on its website. The purpose of this requirement is to improve transparency and enable stakeholders to ascertain the details of their claims at a central platform. This requirement applies to every liquidation process (a) ongoing as on the date of notification of Insolvency and Bankruptcy Board of India (Liquidation Process) (Amendment) Regulations, 2021, and (b) commencing on or after the said date. In pursuance of the above, the Board has made available an electronic platform at http://www.ibbi.gov.in for filing a list of stakeholders as well as updating it thereof. The platform permits multiple filings by the liquidator as and when the list of stakeholders is updated by him. The format of the list of stakeholders, as finalized in consultation with the insolvency professional agencies, is placed as Annexure. The insolvency professionals are directed to file the list of stakeholders of the respective corporate debtor under liquidation and modification thereof, in the aforesaid format, within three days of the preparation of the list or modification thereof, as the case may be. The filings due as on the date of the circular shall be filed within 15 days of this circular.

9. Virtual hearing by NCLT Benches w.e.f. 12.04.2021

National Company Law Tribunal (NCLT) vide order dated 23.02.2021 had allowed that all the NCLT Benches shall start regular Physical hearing w.e.f. 01.03.2021. However, due to a sharp increase in Covid-19 cases throughout the country, the NCLT benches have taken up regular hearing through Virtual Conference w.e.f 12.04.2021.

10.Providing copy of the application to the Board, as mandated under Rule 9 of the Insolvency and Bankruptcy (Application to Adjudicating Authority for Insolvency Resolution Process for Personal Guarantors to Corporate Debtors) Rules, 2019.

IBBI vide Circular dated 2nd February 2021 has provided that Rule 9 of the Insolvency and Bankruptcy (Application to Adjudicating Authority for Insolvency Resolution Process for Personal Guarantors to Corporate Debtors) Rules, 2019 mandates an applicant to provide a copy of the application filed under section 94

(1) and section 95 (1) of the Insolvency and Bankruptcy Code, 2016 (Code) for initiation for insolvency resolution process of a personal guarantor to a corporate debtor, inter-alia, to the Board for its record.

In order to make it convenient for the applicants, the Board has made available a facility on its website at https://ibbi.gov.in/intimation-applications/iaaa-personal-one for providing a copy of the application online to the Board. The format has been shown under Annexure A and its step-by-step guidelines in Annexure B. On the rightful submission of the online application, the applicant shall get an acknowledgment.

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