IBBI (Insolvency Resolution Process for Corporate Persons) (Second Amendment) Regulations, 2021

  • In exercise of powers conferred by Clause (t) of Sub-Section (1) of Section 196 read with Section 240 of the Insolvency and Bankruptcy Code, 2016 (IBC), the Insolvency and Bankruptcy Board of India (IBBI), on July 14, 2021, notified the following amendments to the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 (CIRP Regulations):
    • 3 of the Principal Regulation has been substituted to state that an Interim Resolution Professional (IRP) or the Resolution Professional (RP), who is a director or a partner of an insolvency professional entity, shall not continue as the interim resolution professional or resolution professional, in a CIRP if the insolvency professional entity or any other partner or director of such insolvency professional entity represents any other stakeholder in that CIRP.
    • Regulation 4B has been introduced which mandates that the IRP or RP shall disclose all the former name(s) and registered office address(es) so changed along with the current name and registered office address in every communication, record, proceeding or any other document. This is mandatory where a corporate debtor has changed its name or registered office address during the period of 2 years preceding the insolvency commencement date.
    • Regulation 27 of the Principal Regulation has been substituted to state that the RP within 7 days of his appointment but not later than 47th day from the insolvency commencement date, shall appoint two registered valuers to determine the fair value and the liquidation value of the corporate debtor.
    • Under Regulation 35A(2) of the Principal Regulation, the words 'under intimation to the Board' have been deleted. Consequently, the RP does not have to intimate the IBBI at the time of making his opinion regarding the avoidable transactions. However, this has to be read with the newly introduced Regulation 40B(1B) which states that the RP shall file Form CIRP 8 intimating details of his opinion and determination under Regulation 35A, on or before the 140th day of the insolvency commencement date. The period for filing Form CIRP 8 shall not become due unless a period of 30 days has elapsed from the CIRP date.

Notice by Bombay Stock Exchange for companies undergoing CIRP

  • The Bombay Stock Exchange (BSE) vide Notice dated July 09, 2021 issued a guidance note for the Resolution Professionals of the companies undergoing Corporate Insolvency Resolution Process (CIRP) to mandatorily comply with the SEBI (Listing Obligations and Disclosure Requirements) Regulation (LODR Regulations), 2018.
  • The Notice, in consultation with SEBI, mentions certain disclosures that are to be made in addition to the list prescribed under the LODR Guidelines in relation to the CIRP. The disclosures are as under:
    • Prior intimation of at least 2 working days intimating about the date of hearing where NCLT would be considering the Resolution Plan
    • Disclosure of the approval of Resolution Plan to be made to the Exchange on oral pronouncement or otherwise of the Order on immediate basis and not later than 30 minutes
    • The RP shall inform through the Exchange Platform about any impact on the existing holders/investors of listed securities on areas such as status of listing, the value of holding of existing holders, write off/ cancellation/extinguishment of existing equity shares/preference shares/debentures, etc. without any payment to such holders, where applicable
    • Companies/RPs are advised to be guided by the provisions of the LODR Regulations and advised to maintain the confidentiality of the Resolution Plan until details are not submitted on the Exchange Platform

Amendment in the Debts Recovery Tribunal and Debts Recovery Appellate Tribunals Electronic Filing Rules, 2020

  • The Ministry of Finance vide notification dated July 22, 2021, in exercise of the powers conferred by Clause (ccd) of sub-Section (2) of Section 36 of the Recovery of Debts and Bankruptcy Act, 1993 (51 of 1993), amended the Debts Recovery Tribunal and Debts Recovery Appellate Tribunals Electronic Filing Rules, 2020 (Principal Rules) by issuing the Debts Recovery Tribunals and Debts Recovery Appellate Tribunals Electronic Filing (Amendment) Rules, 2021 (Amended Rules).
  • A new proviso has been added to Rule 3(2) of the Principal Rules which states 'Provided that e filing of pleading shall be mandatory where the debt to be recovered, as mentioned in the application, is rupees one hundred crore and above'.
  • Pursuant to this addition, it is now mandatory for the applicants seeking recovery before the Debts Recovery Tribunal or Debts Recovery Appellate Tribunal to file pleadings in electronic form before the Debt Recovery Tribunal and the Debt Recovery Appellate Tribunal where the debt to be recovered is INR 100 crore and above.

The Insolvency and Bankruptcy Code (Amendment) Bill, 2021

  • Finance Minister on July 26, 2021 introduced the Insolvency and Bankruptcy Code (Amendment) Bill, 2021 (Bill). The Bill seeks to replace the IBC (Amendment) Ordinance, 2021 promulgated by the President of India on April 04, 2021 which introduced Chapter IIIA of the IBC and also made certain alterations to the provisions of the Principal Act. A brief overview of the same is as under:
    • A proviso has been added to Section 4 of the IBC whereby a minimum threshold of not more than one crore rupees for initiating pre-packaged insolvency resolution process has been introduced
    • Chapter III-A has been introduced which comprises of Sections 54A to 54P which elaborates on pre-packaged insolvency resolution process for micro, small and medium enterprise. These are to be read with the IBBI (Pre-packaged Insolvency Resolution Process) Regulations, 2021 (PPIRP Regulations)
    • The Bill also introduces provisions for penalty for fraudulent management of the Corporate Debtor during PPIRP and punishment for offences related to PPIRP

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