The Insolvency and Bankruptcy Board of India ("IBBI") notified amendments to the IBBI (Voluntary Liquidation Process) Regulations, 2016, and IBBI (Liquidation Process) Regulations, 2016 for a second time. The amended regulations, which came into force on 16.09.2022, introduce the following changes:
- During the first 60 days of liquidation commencement, the Committee of Creditors ("CoC") constituted during Corporate Insolvency Resolution Process ("CIRP") shall function as the Stakeholders Consultation Committee ("SCC"). The SCC shall be reconstituted after adjudication of claims based upon admitted claims.
- The SCC has been empowered to propose the replacement of the liquidator to the Adjudicating Authority and fix of the fees.
- If a claim is not filed during the liquidation process, then the amount of claim collated during CIRP shall be verified by the liquidator.
- Specific event-based timelines have been stipulated for the auction process.
- Before the filing of an application for dissolution or closure of the process, SCC shall advise the liquidator, on the way proceedings in respect of avoidance transactions or fraudulent or wrongful trading, shall be pursued after the closure of liquidation proceedings.
- Wherever the CoC decides that the process of compromise or arrangement may be explored during the liquidation process, the liquidator shall file an application within thirty days of the order of liquidation before Adjudicating Authority for considering the proposal of compromise.
- Before the filing of an application for dissolution, SCC shall advice the liquidator, the manner in which proceedings in respect of finality to avoidance applications.
The IBBI has amended the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 ("CIRP Regulations") for the fourth time and has notified the amendment on 16.09.2022. The recent amendment enables the Resolution Professional (RP) and the CoC to issue a request for a partial resolution plan a second time for the sale of one or more of the assets of the Corporate Debtor (CD) in cases where no resolution plan has been received for the corporate debtor as a whole. It enables a resolution plan to include the sale of one or more assets of CD to one or more successful resolution applicants submitting resolution plans for such assets and providing for appropriate treatment of the remaining assets.
IBBI released a new amendment IBBI (Information Utilities) (Amendment) Regulations, 2022 aiming to fill the gaps relating to the information utility. The Regulation 20 in the amendment has a sub-regulation that requires creditors to submit information of default with information utilities before applying to start CIRP under section 7 or 9.
The IBBI has released the Insolvency and Bankruptcy Board of India (Inspection and Investigation) (Amendment) Regulations, 2022. The Amendment gives the Disciplinary Committee the authority it needs to act appropriately if the Board determines that the service provider has violated the Code's rules. Chapter III-A (Investigation During Disposition of Complaint or Grievance) and Chapter III-B were added as new chapters by the amendment (Interim Order on Material Available on Record).
IBBI published a circular on June 15, 2022, regarding applications made in accordance with rules 4, 6, or 7 of the 2016 Insolvency and Bankruptcy (Application to Adjudication Authority) Rules. The Board decided that the Information Utility shall first share the application with other creditors in order to notify them. Secondly, notify the applicant that it must file "information of default"; and then process the "information of default" for the purpose of issuing ROD.
Originally Published January 2023
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