Background:
This notification by the Insolvency and Bankruptcy Board of India (IBBI), dated 26th May 2025, amends the Insolvency Resolution Process for Corporate Persons Regulations, 2016. It introduces key changes to improve transparency, fairness, and efficiency in the Corporate Insolvency Resolution Process (CIRP).
Key Amendments:
1. Regulation 18 – Committee of Creditors (CoC) Meetings:
- New sub-regulation (5) inserted: The CoC may invite providers of interim finance to attend meetings as observers without voting rights.
✓ Purpose: Enables transparency and alignment with interim financiers during CIRP.
2. Regulation 36A – Expression of Interest (EOI):
- New sub-regulation (1A) inserted: The Resolution Professional (RP) may, with CoC approval, invite EOIs:
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- For the corporate debtor as a whole,
- For one or more assets,
- Or for both.
✓ Purpose: Facilitates flexible resolution strategies, including asset-wise sale plans.
3. Regulation 36B – Request for Resolution Plans:
- Sub-regulation (6A) has been deleted.
✓ Impact: Simplifies the regulatory structure and eliminates potential redundancy or confusion.
4. Regulation 38 – Contents of the Resolution Plan:
- Clause (b) in sub-regulation (1) modified for clarity.
- New proviso added: In staggered payment plans, dissenting financial creditors must be paid at least pro rata and in priority over approving creditors at each payment stage.
✓ Purpose: Ensures fair treatment of dissenting financial creditors.
5. Regulation 39 – Approval of Resolution Plan:
- Sub-regulation (2): Reference to mandatory compliance removed; inclusion of non-compliant plans mandated.
- Sub-regulation (3)(a): Now explicitly includes requirement to comply with Code and regulations.
✓ Purpose: Allows better scrutiny by the CoC and maintains transparency.
Implications:
- Enhances participation of stakeholders like interim financiers.
- Promotes asset-level resolution to maximize value.
- Protects rights of dissenting financial creditors.
- Encourages transparency through inclusion of non-compliant plans.
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