IBBI Notifies The IBBI (Liquidation Process) (Fourth Amendment) Regulations, 2026

The IBBI, through notification dated 01.06.2026 has released the IBBI (Liquidation Process) (Fourth Amendment) Regulations, 2026 (“Liquidation Amendment Regulations”) to amend the IBBI (Liquidation Process) Regulations, 2016 (“Liquidation Principal Regulations”), in order to give effect to the changes brought about by the Amendment Act.

The key amendments introduced by the Liquidation Amendment Regulations are as follows:

1. Substitution of Regulation 2A (Contributions to liquidation costs): The substituted Regulation 2A provides that the liquidator may call upon the members of the CoC to contribute the excess of the liquidation costs over the liquid assets of the CD.
2. Compromise or arrangement: A proviso has been inserted in Regulation 2B (Compromise or arrangement) to provide that no compromise or arrangement under Section 230 of CA 2013 shall be filed by the liquidator, unless, it has been approved by requisite majority of creditors provided under Section 230(6) of CA 2013 and the amount realisable to the creditors under the proposed compromise or arrangement is higher than the liquidation value determined as on the insolvency commencement date.
3. CoC to steer the liquidation process:

(a) ‘Committee’ has been defined under Regulation 2(1)(ba) as CoC constituted under Section 21 of IBC, substituting the stakeholders’ consultation committee provided in the Liquidation Principal Regulations.

(b) Regulation 3A (Recommendation of liquidator by CoC) has been inserted to provide that CoC shall, prior to passing of the order for liquidation, recommend the name of an insolvency professional for appointment as liquidator, by a vote of not less than 66% (sixty six percent) of voting share of CoC.

(c) Regulation 4 (Liquidator’s fee) has been substituted to provide that the CoC shall fix the fee of the liquidator in the first meeting after appointment of liquidator during the liquidation process. If CoC does not fix the fee, a table of the calculation of fee as a percentage of amount distributed to stakeholders has been provided.

(d) Regulation 8 (Consultation with stakeholders) has been substituted with Regulation 8 (Committee of Creditors). The substituted regulation provides that the CoC shall continue to function during liquidation process. A secured creditor who has not relinquished its security interest under Section 52 of IBC shall not be part of CoC and creditor whose value of debt remains and is considered as unsecured creditor shall be part of CoC.

(e) Regulation 8A (Facilitation of transfer of assets) has been inserted. It provides that where CD is a corporate guarantor undergoing liquidation process, liquidator of such CD shall coordinate with RP of CD. Liquidator shall obtain approval from the CoC of CD which has given the corporate guarantee for transfer of asset in the CIRP of the CD to whom such guarantee has been given.

(f) Regulation 8B (Replacement of liquidator) has been inserted. It provides that CoC, may by a vote of not less than 66% (sixty six percent), propose to replace the liquidator and shall file an application, after obtaining written consent of the proposed liquidator, before the Ld. Adjudicating Authority.

4. Verification of claims: Regulation 30 (Verification of claims) has been substituted to provide that liquidator shall verify the claims received within 7 (seven) days of receipt of claim and may either reject or admit the claim. The liquidator shall also verify the claims which were received but were not verified during CIRP, within 7 (seven) days of the liquidation commencement date and may either admit or reject the claim, however, claims verified during CIRP shall not be re-verified.
5. 5. Sale of assets of CD: Regulation 33 (Mode of Sale) has been amended to provide that the liquidator shall not sell the assets of CD, without prior permission of the Ld. Adjudicating Authority, to a related party of CD, his related party or any professional appointed by him. Further, the liquidator may sell the assets of the CD by means of private sale only after prior approval of the CoC with voting share of 66% (sixty six percent), when the asset is perishable, likely to deteriorate in value if not sold immediately or permission of the Ld. Adjudicating Authority has been obtained for such sale. However, liquidator shall not sell the assets of CD, by way of private sale, to a related party of CD, his related party or any professional appointed by him.
6. Model timeline for liquidation process: Regulation 47 has been substituted and several timelines have been tightened to align the process to overall timelines provided under the Amendment Act.

The Liquidation Amendment Regulations came into force on the date of their publication in the Official Gazette, i.e., 03.06.2026.

Footnote

^{1 IBBI (Liquidation Process) (Fourth Amendment) Regulations, 2026.}

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