STATUTORY UPDATES
Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) (Amendment) Regulations, 2025 dated February 03, 2025
- The IBBI (Insolvency Resolution Process for Corporate Persons)
(Amendment) Regulations, 2025 (CIRP Amendment Regulations) have
been introduced to streamline the resolution processes relating to
real estate projects and mandates as under.
- Handing over the possession under Regulation
4E
- Where an allottee has completed his part of the performance under the agreement and has requested for possession of its unit, the Resolution Professional (RP) shall, with the approval of 66% of the members of the Committee of Creditors (CoC), hand over the possession of such unit to the allottee.
- Appointment of facilitators under Regulation 16C and
Regulation 16D
- In order to ensure effective participation of the creditors in a class, the IBBI has proposed for appointment of an insolvency professional, apart from the RP and the authorised representative of such class, as a facilitator. The role of such facilitator will be to facilitate communication between the creditors and the authorised representative, providing information and clarification and improve the overall presentation and communication of the class.
- Participation of competent authority under Regulation
18(4)
- The members of CoC may invite competent authorities such as NOIDA, HUDA, etc. to the CoC meetings for their inputs on land related issues, which shall enhance the feasibility and viability of the resolution plans and also develop confidence amongst the homebuyers.
- Report on status of development rights and permissions
relating to the project under Regulation 30C
- In order to enable the CoC to take informed decisions, the RP shall, within 60 days for the Insolvency Commencement Date (ICD), prepare such report for consideration of the CoC.
- Relaxation for submission of resolution plans under
Regulation 36A(4)(iv)
- Where the resolution applicant is an association or a group of homebuyers, the amended regulations empowers the CoC to relax certain parameters for evaluation of its resolution plan such as the eligibility criteria, conditions regarding refundable deposit, etc.
- Monitoring committee for implementation of a Resolution
Plan under Regulation 38(4)
- The CIRP Amendment Regulations state that the CoC should consider setting up a monitoring committee comprising of an insolvency professional, representative(s) from STATUTORY UPDATES the CoC and the representative(s) of the resolution applicant, to oversee the implementation of an approved Resolution Plan and such monitoring committee must submit quarterly reports regarding the implementation of the approved Resolution Plan with the CoC.
- MSME registration details under Schedule I – Form
G
- In order to encourage wider participation, the RP shall be required to disclose registration status of the Corporate Debtor as an MSME while publishing Form G.
- Handing over the possession under Regulation
4E
Insolvency and Bankruptcy Board of India (Voluntary Liquidation Process) (Amendment) Regulations, 2025 and Insolvency and Bankruptcy Board of India (Liquidation Process) (Amendment) Regulations, 2025 dated January 28, 2025.
- Both, IBBI (Liquidation Process) Regulations, 2016 (Liquidation Regulations) as well as IBBI (Voluntary Liquidation Process) Regulations, 2016 (VL Regulations) have been amended by the IBBI to address the immediate challenges and enhance the efficiency the respective processes.
- By way of IBBI (Voluntary Liquidation Process) (Amendment)
Regulations, 2025 (VL Amendment Regulations), the
IBBI has made the following changes in the existing regulations.
- Corporate Voluntary Liquidation Account under
Regulation 39(1)
- In order to expeditiously process the claims and for the purposes of overall fund management, the IBBI has proposed to continue to manage the Corporate Voluntary Liquidation Account in a separate account with a scheduled bank.
- Filing of forms under Regulation 41A
- The Liquidator shall now be mandatorily required to submit details relating to the Voluntary Liquidation process in the electronic forms available on IBBI's portal. Non – filing or delayed filing of such forms shall attract serious consequences such as a fine of INR 500 per form per calendar month, as notified by the IBBI.
- Details of Stakeholders under Schedule I, in Form G,
Table B
- Table B in Form G under the Schedule I will now include the following details of stakeholders entitled to claim undistributed proceeds : (a) Name; (b) Address and Contact details; (c) Identification Number; (d) Amount due; (e) Nature of Amount due; (f) Application provisions of Income Tax Act, 1961 for tax deduction; (g) Amount of tax to be deducted; (f) Reason for undistributed proceeds.
- Realisation of uncalled or unpaid capital
- In order to avoid delays, the IBBI has amended the VL Regulations so as to allow completion of the process even if there is uncalled capital as there are adequate safeguards already in the regulations to protect the creditors.
- Corporate Voluntary Liquidation Account under
Regulation 39(1)
- By way of IBBI (Liquidation Process) (Amendment) Regulations,
2025 (Liquidation Amendment Regulations), the IBBI
has made the following alterations in the existing regulations.
- Auction Process under Clause 12A – 12E of
Schedule I
- The timeline to participate in the auction process has been increased from 14 days to 30 days to facilitate wider participation in the auction.
- The amended Liquidation Process Regulations mandate that the auction notice published by a Liquidator mentions that the Ernest Money Deposit (EMD) shall be forfeited if the prospective bidder is found ineligible during the process.
- The prospective bidders must submit all necessary documents including declaration of eligibility under Section 29A of the IBC on the electronic platform or as mentioned in the auction notice.
- The Liquidator should verify the eligibility of the highest bidder within 3 days and consult with the Stakeholders Consultation Committee (SCC) regarding the same.
- If the H1 bidder is found to be ineligible by the Liquidator, the H2 bidder may be considered in consultation with the SCC.
- Submission of Form H under Regulation 45(3)(a)
- In order to improve accountability, the amended Regulations now mandate the Liquidator to file final report with Form H even in cases where scheme of compromise or arrangement under Section 230 of the Companies Act, 2013 is approved.
- Corporate Liquidation Account under Regulation
46(1)
- With the objective of expeditious claim processing and overall fund management, the IBBI has proposed to continue to manage the Corporate Liquidation Account in a separate account with a scheduled bank.
- Filing of forms under Regulation 47B
- The Liquidator shall now be mandatorily required to submit details related to the Liquidation process in the electronic forms available on IBBI's portal. Non – filing or delayed filing of such forms shall attract serious consequences such as a fine of INR 500 per form per calendar month, as notified by the IBBI.
- Details of Stakeholders under Schedule II, in Form I,
Table B
- Table B in Form I under the Schedule II of Liquidation Regulations will now include the following details of stakeholders entitled to claim undistributed proceeds : (a) Name; (b) Address and Contact details; (c) Identification Number; (d) Amount due; (e) Nature of Amount due; (f) Application provisions of Income Tax Act, 1961 for tax deduction; (g) Amount of tax to be deducted; (f) Reason for undistributed proceeds.
- Auction Process under Clause 12A – 12E of
Schedule I
Discussion Paper on streamlining Processes under the IBC: Reforms for Enhanced Efficiency and Outcomes dated February 04, 2025
- By way of this discussion paper, the IBBI aims to streamline
the processes envisaged under the IBC and has proposed the
following amendments.
- In order to avoid accumulation of costs and to prevent misuse of moratorium under Section 14(1)(d), the IBBI has proposed that the CoC will maintain continuous oversight and regularly review the operational expenses being undertaken by the Corporate Debtor, especially with regards to the leased property of the Corporate Debtor.
- Section 14 (2) of the IBC provides for uninterrupted supply of essential goods or services to the Corporate Debtor during the CIRP period. The IBBI has proposed to provide for a more comprehensive example of essential services in Regulation 32 so as to correctly apply the protection of moratorium to such services.
- In order to capitalise on the collective strength of companies
with intertwined operations, the IBBI has proposed to introduce a
mechanism for coordination of CIRP of intertwines
entities, which shall provide for:
- Provisions for joint hearing
- Appointment of a common RP
- Information sharing protocols
- Coordinated timelines
- The IBBI has proposed to amend the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 (CIRP Regulations) so as to mandate presentation of all resolution plans received by the RP before the CoC, regardless of their compliance status, to ensure transparency and informed decision making by the CoC.
- In order to provide comprehensive information about the Corporate Debtor to the RP at the commencement of the CIRP and avoid any information gaps and delays, the IBBI has proposed to mandate submission of Statement of Affairs (including financial statements, overview of employee/ workmen, records of Corporate Debtor) by the Corporate Debtor in response to an application filed seeking initiation of CIRP.
- In order to avoid any uncertainty and to ensure finality of the resolution process, the IBBI has proposed to amend the CIRP Regulations to explicitly state that no modifications can be sought once a resolution plan is approved under Section 31 of the IBC and all the conditions must be built into the Resolution Plan before approval.
- In order to incentivise the interim finance providers and to help them assess and monitor the investment risk and operational performance of the Corporate Debtor, the IBBI has proposed to invite the interim finance providers to the CoC meetings of the Corporate Debtor as observes with no voting rights.
- In order to ensure transparency and effective treatment
of avoidance transactions, the IBBI has proposed the
following amendments in the CIRP Regulations.
- Enhanced disclosure requirements in the Information Memorandum.
- Avoidance transactions disclosed in the Information Memorandum must be incorporated in the final resolution plan submitted for the Corporate Debtor.
- Avoidance transactions not disclosed under the Information Memorandum cannot be transferred under the Resolution Plan.
- The IBBI has proposed to amend Regulation 36B of the CIRP Regulations to allow the RP, with the approval of the CoC to invite resolution plans concurrently for both, the Corporate Debtor as a whole and for specific businesses or assets of the Corporate Debtor so as to reduce timelines and encourage wider participation.
- In order to expedite the implementation of resolution plan and maximise the value of assets of the Corporate Debtor, the IBBI proposes to introduce a two-stage approval process for resolution plans by the Adjudicating Authority where the financial bid and basic implementation framework may be approved early. It is proposed that the inter-se disputes, distribution matters and other related aspects maybe dealt with by the Adjudicating Authority at the later stage.
- In order to streamline the process, the IBBI has proposed to amend IBBI (Insolvency Resolution Process for Personal Guarantors to Corporate Debtors) Regulations, 2019 (PG Regulations) to mandate submission of report by the RP to the Adjudicating Authority regarding non – submission of resolution plan for personal guarantor. Basis this report, the Adjudicating Authority may terminate the resolution process, which shall enable the creditor or the debtor to file for bankruptcy.
- Basis the suggestions made by the Insolvency Law Committee and looking at the resolution statistics for sale as a going concern and to provide for faster resolution, the IBBI has proposed to omit the provisions relating to sale as a going concern in Liquidation Process Regulations.
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