ARTICLE
23 September 2024

Insolvency And Bankruptcy Board Of India (Liquidation Process) (Amendment) Regulations, 2024

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JSA

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JSA is a leading national law firm in India with over 600 professionals operating out of 7 offices located in: Ahmedabad, Bengaluru, Chennai, Gurugram, Hyderabad, Mumbai and New Delhi. Our practice is organised along service lines and sector specialisation that provides legal services to top Indian corporates, Fortune 500 companies, multinational banks and financial institutions, governmental and statutory authorities and multilateral and bilateral institutions.
The Insolvency and Bankruptcy Board of India ("IBBI"), vide notification dated February 12, 2024, issued the IBBI (Liquidation Process) (Amendment) Regulations, 2024, amending the IBBI (Liquidation Process) Regulations...
India Insolvency/Bankruptcy/Re-Structuring

The Insolvency and Bankruptcy Board of India ("IBBI"), vide notification dated February 12, 2024, issued the IBBI (Liquidation Process) (Amendment) Regulations, 2024, amending the IBBI (Liquidation Process) Regulations, 2016 ("2016 Principal Regulations"). Some of the key amendments are as follows:

  1. the consultation committee can advise the liquidator on matters relating to: (a) review of marketing strategy in case of failure of sale of corporate debtor as a going concern; (b) continuation or institution of any suits or legal proceedings by or against the corporate debtor; and (c) extension of payment of balance sale consideration;
  2. in all cases where the liquidator proposes to continue or initiate any legal proceeding, he must, after presenting the economic rationale for the proposal, seek the advice of the consultation committee;
  3. in every meeting, the liquidator must present to the consultation committee: (a) the actual liquidation cost along with reasons for exceeding the estimated cost, if any; (b) the consolidated status of all the legal proceedings; and (c) the progress made in the process;
  4. where the liquidator is of the opinion that it is viable to run the corporate debtor as a going concern, he must consult the consultation committee and only on its advice he must run the affairs of the corporate debtor as a going concern to the extent approved;
  5. where the liquidator is of the opinion that fresh valuation is required, the liquidator must facilitate a meeting wherein registered valuers must explain the methodology being adopted to arrive at valuation to the consultation committee before finalisation of valuation reports and the liquidator must share the valuation reports with the members of the consultation committee after obtaining an undertaking that they will maintain the confidentiality of such reports and will not use the reports to cause an undue gain or undue loss to itself or any other person;
  6. if there is deviation of 25% in the valuation of an asset class under regulation 35 (2) of the 2016 Principal Regulations from valuation under regulation 35 of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016, the liquidator must facilitate a meeting wherein the registered valuers must explain the reasons for the difference to the consultation committee;
  7. wherever the corporate debtor has given possession to an allottee in a real estate project, such asset will not form a part of the liquidation estate of the corporate debtor; and
  8. Form A (Proforma for Reporting Consultations with Stakeholders) is inserted.

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