- The Insolvency and Bankruptcy Board of India (IBBI) has notified the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) (Fourth Amendment) Regulations, 2025, which have come into force with effect from May 28, 2025.
- The key regulatory changes introduced through this amendment are outlined below.
FLEXIBILITY INTRODUCED IN ASSET SALE PROCESS UNDER CIRP
- The restriction previously imposed under Regulation 36B(6A), which permitted the Resolution Professional (‘RP') to invite resolution plans for specific assets only after the failure to receive a resolution plan for the entire corporate debtor, has now been omitted.
- Pursuant to addition of Regulation 36A(1A), the RP is now
authorised, with the prior approval of the Committee of Creditors
(‘CoC'), to concurrently invite expressions of interest
and submission of resolution plans for:
- the corporate debtor as a whole;
- one or more of its individual assets; or
- a combination of both.
- This amendment enables a more pragmatic approach to value maximization, particularly in cases involving segmented or asset-heavy businesses.
OBSERVER ROLE FOR INTERIM FINANCIERS
- Regulation 18(5) has been introduced to empower the CoC to direct the RP to invite interim finance providers to attend designated CoC meetings as observers, without conferring any voting rights.
- The amendment is likely to foster greater confidence among interim financiers and incentivize broader participation in supporting distressed entities.
PAYMENT TO DISSENTING FINANCIAL CREDITORS
- A safeguard has been incorporated through the proviso to Regulation 38(1)(b) mandating that when a resolution plan contemplates payment in multiple stages, dissenting financial creditors must receive payments on a pro-rata basis at each stage.
- • Furthermore, such payments to dissenting financial creditors must be accorded priority over those made to consenting creditors during each stage.
STREAMLINED RESOLUTION PLAN EVALUATION
- Pursuant to the amendment in Regulation 39, the RP is now explicitly required to categorize resolution plans into two classes—those that are compliant and those that are non-compliant with the provisions of the Insolvency and Bankruptcy Code, 2016 and the applicable regulations.
- The CoC shall consider and evaluate only those resolution plans which are in conformity with the statutory requirements of the Code and the CIRP Regulations.
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