STATUTORY UPDATES

Filing of list of creditors under Clause (ca) of Sub-Regulation (2) of Regulation 13 of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016

  • The Insolvency and Bankruptcy Board of India (IBBI) in pursuance of Clause (ca) of SubRegulation (2) of Regulation 13 of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 (CIRP Regulations), had issued a Circular dated November 27, 2020 directing the Insolvency Professionals to file the list of creditors and modifications thereof in the stipulated format on IBBI's website.
  • In the said format, a particular column for 'Identification No.' was mentioned which sought the identification details of the creditors. In a few instances, sensitive personal information such as Aadhar Number, PAN Card, etc. were being filled in.
  • Therefore, in order to ensure privacy and to prevent the circulation of the confidential information of any particular creditor, the IBBI vide Circular dated November 24, 2021 issued a new format to file the list of creditors. The new format removes the requirement of mentioning the 'Identification No.' while keeping the rest of the contents of the earlier format same.
  • The said Circular also directs the Insolvency Professionals to file the list of creditors of the respective Corporate Debtor and modification thereof, in the revised format, within three days of the preparation of the list or modification thereof, as the case may be.
  • A similar amendment vide another circular dated November 24, 2021 has also been introduced in the filing and modification of the list of stakeholders in the Liquidation Process of a Corporate Debtor. The amendment has been brought in the pursuance of clause (d) of Sub-Regulation (5) of Regulation 31 of the IBBI (Liquidation Process) Regulations, 2016 (Liquidation Process Regulations) requiring the Liquidator to file list of stakeholders on the electronic platform of the IBBI for dissemination on its website.
  • This amendment has been brought about keeping in mind the fundamental right to privacy of every individual.

Guidelines for Insolvency Professionals to act as Interim Resolution Professionals, Liquidators, Resolution Professionals and Bankruptcy Trustees (Second Recommendation)

  • The Insolvency and Bankruptcy Board of India (IBBI) on December 1, 2021 issued the .Insolvency Professionals to act as Interim Resolution Professionals, Liquidators, Resolution Professionals and Bankruptcy Trustees (Recommendations) (Second) Guidelines, 2021' (the Guidelines), in furtherance to the 'Insolvency Professionals to act as Interim Resolution Professionals, Liquidators, Resolution Professionals and Bankruptcy Trustee (Recommendations) Guidelines, 2021', which listed out certain criteria basis which a Insolvency Professional may be included in the Panel of IPs and thereafter appointed by the Adjudicating Authority.
  • Keeping in mind the basic objective of the IBC i.e., timely resolution of the Corporate Debtor, these Guidelines seek to reduce the time involved in the appointment of Insolvency Professional as an Interim Resolution Professional, Resolution Professional, Liquidator and Bankruptcy Trustee in an ongoing Resolution or Liquidation Process, as the case may be.
  • At the time of reference/directions received from the NCLT, the IBBI does not have prior information about the volume, nature and complexity of an insolvency or bankruptcy process and the resources available at the disposal of an Insolvency Professional. In such a situation, the IBBI is unlikely to add much value by recommending an Insolvency Professional for the process. Further, the time required for the final appointment of the Insolvency Professional may turn out to be a lengthy and time-consuming process. Hence, to avoid administrative delays in appointment of the Insolvency Professional, by way of these Guidelines, the IBBI has recommend that a panel of Insolvency Professionals be made for the purpose of section 16(4), 34(6), 97(4), 98(3), 125(4), 146(3) and 147(3) of the IBC.
  • For the formation of the Panel, the Guidelines require mentioning of the following parameters:
    • The Panel will have Zone wise list of IPs based on the registered office (address as registered with the Board) of the IP
    • Each Panel will have a validity of 6 months after which a new Panel will replace it
    • Any name from the Panel may be picked by the NCLT for the appointment of IRP, Liquidator, RP or BT for the CIRP, Liquidation Process, Insolvency Resolution or Bankruptcy Process relating to corporate debtors and their personal guarantors
    • The DRT may pick up any name from the Panel for appointment as RP or BT, for an Insolvency Resolution or Bankruptcy Process for personal guarantors to corporate debtors, as the case may be
  • The eligibility criteria of the Insolvency Professionals to be included in the Panel are as follows:
    • There is no disciplinary proceeding, whether initiated by the IBBI or the IPA of which he is a member, pending against him
    • He has not been convicted at any time in the last three years by a court of competent jurisdiction
    • He expresses his interest to be included in the Panel for the relevant period
    • He undertakes to discharge the responsibility as IRP, Liquidator, RP or BT, as he may be appointed by the AA
    • He holds an Authorisation for Assignment (AFA), which is valid till validity of Panel
  • The aforementioned Panel shall have Zone wise list of Insolvency Professionals. An Insolvency Professional will be included in the Panel against the Zone where his registered office (address as registered with the IBBI) is located.
  • In order to select the Insolvency Professionals, the IBBI shall invite expression of interest from Insolvency Professionals in 'Form A' by sending an e-mail to their email addresses registered with the IBBI and hosting the guidelines on IBBI's website. The expression of interest must be received by the IBBI in Form A in the manner and date as specified.
  • The selection in the Panel shall be made upon the basis of the volume of assignments that a particular Insolvency Professional has. Hence, the Insolvency Professional having the least volume of assignment shall score the highest and the Insolvency Professional having highest volume shall be scored the least.
  • The participating Insolvency Professional must understand that, in case such professional is selected in the panel, then he must not:
    • Withdraw his interest to act as IRP, Liquidator, RP or BT, as the case may be
    • Decline to act as IRPs, Liquidator, RP or BT, as the case may be, if appointed by the AA
    • Surrender his registration to the IBBI or membership or AFA to his IPA; during the validity of the Panel
  • Further, the following conditions must be understood by the Insolvency Professionals prior to submitting their respective Expression of Interest:
    • An Insolvency Professional in the Panel will be appointed as Administrator, at the sole discretion of the NCLT
    • The submission of Expression of Interest in accordance with these guidelines, is an unconditional consent by the Insolvency Professional to act as IRPs, Liquidator, RP or BT, as the case may be
    • An Insolvency Professional who declines to act IRPs, Liquidator, RP or BT, on being appointed by the NCLT, shall not be included in the Panel for the next five years, without prejudice to any other action that may be taken by the IBBI

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