IBC Updates _ Two Regulations Updated by IBBIDated: 26th
July, 2019
IBBI amends:
1. The Insolvency and Bankruptcy Board of India
(Insolvency Resolution Process for Corporate Persons) Regulations, 2016 a
2. The Insolvency and Bankruptcy Board of India
(Liquidation Process) Regulations, 2016
New Regulations notified by IBBI are:
2. The Insolvency and Bankruptcy Board of India (Liquidation
Process) (Amendment) Regulations, 2019
The salient amendments affected by the IBBI (Insolvency Resolution Process
for Corporate Persons) (Amendment) Regulations, 2019 are:
a)
The
amendments specify the process for withdrawal of applications before
constitution of committee of creditors (CoC), after constitution of CoC but
before issue of invitation for expression of interest, and after issue of
invitation for expression of interest
b)
The amendments require that while approving a resolution plan
or deciding to liquidate the corporate debtor, the CoC may:
i) approve a
plan providing for contribution for meeting the liquidation costs,
(ii) recommend sale of the corporate debtor or sale of
business of the corporate debtor as a going concern, and
(iii) fix, in consultation with the RP, the fee payable
to the liquidator, if an order for liquidation is passed by the Adjudicating
Authority.
The salient amendments affected by the IBBI (Liquidation Process) (Amendment) Regulations,
2019 are:
(i) The amendments specify the process
for (i) sale of corporate debtor as going concern, and (ii) sale of business of
corporate debtor as going concern under liquidation. These also provide that
where a corporate debtor is sold as a going concern, the liquidation process
shall be closed without dissolution of the corporate debtor.
(ii) The amendments require completion
of liquidation process within one year of its commencement, notwithstanding
pendency of applications for avoidance transactions. These provide a model
timeline for each task in the liquidation process. It also specifies a maximum
time of 90 days from the order of liquidation for completion of compromise or
arrangement, if any, proposed by the stakeholders under section 230 of the
Companies Act, 2013. These will ensure that liquidation process is closed at
the earliest.
(iii) The amendments require the
financial creditors, who are financial institutions, to contribute towards the
liquidation cost, where the corporate debtor does not have adequate liquid
resources to complete liquidation, in proportion to the financial debts owed to
them by the corporate debtor, in case the CoC did not approve a plan for such
contribution during corporate insolvency resolution process. However, such contribution along with
interest at bank rate thereon shall form part of liquidation cost, which is
paid in priority.
(iv) The amendments provide for
constitution of a Stakeholders’ Consultation Committee having representation
from secured financial creditors, unsecured financial creditors, workmen and
employees, government, other operational creditors, and shareholder/partners to
advice the liquidator on matters relating to sale. However, the advice of this
committee is not binding on the liquidator.
(v) The amendments require that a
stakeholder may submit its claim or update its claim submitted during the
corporate insolvency resolution process, as on the liquidation commencement
date. Along with submission of claim, a secured creditor shall inform the
liquidator of its decision to relinquish its security interest to liquidation
estate or to realise its security interest.
(vi) The amendments have introduced a
comprehensive compliance certificate to be submitted along with the final
report to the Adjudicating Authority.
The amendment
Regulations are effective from today. These are available at www.mca.gov.in
and www.ibbi.gov.in
Pls add my no for update 9811001514
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