STATUTORY UPDATES

Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) (Amendment) Regulations, 2024

  • The Insolvency and Bankruptcy Board of India (IBBI) vide notification dated February 15, 2024 notified the IBBI (Insolvency Resolution Process for Corporate Persons) (Amendment) Regulations, 2024 (CIRP Amendment Regulations).

  • By way of CIRP Amendment Regulations, IBBI has inserted Regulations 4D, 31B in the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 (CIRP Regulations) and has caused amendment in Regulations 18, 25, 35, 36, 36A, 38, 40 of the CIRP Regulations, as detailed below.

  • Firstly, in consonance with the provisions of Real Estate (Regulations and Development) Act, 2016 (RERA) and to ensure transparency, IBBI has inserted Regulation 4D in the CIRP Regulations to mandate operation of separate bank account by the Resolution Professional for each real estate project.

  • Secondly, in order to streamline and improve the monitoring of the Committee of Creditors (CoC) on the CIRP, IBBI has also inserted Regulation 31B in the CIRP Regulations to state that the insolvency professional shall place the operational status of the Corporate Debtor and shall seek approval for all the costs involved in the process.

  • Thirdly, in order to strengthen the CIRP process, IBBI has caused the following amendments in the CIRP Regulations:

    • Regulation 18(1) of the CIRP Regulations has been amended to mandate meetings of the CoC within a period of 30 days from the last CoC meeting. This period, however, can be extended subject to the condition that there shall be at least one meeting in each quarter.
    • Regulation 25(5)(b) of the CIRP Regulations has been amended to ensure time bound voting process by the members of CoC on any agenda and states that in the event any member of the CoC does not vote during the meeting of the CoC, the Resolution Professional shall seek vote from such members by electronic voting within the time frame decided by the CoC which shall be between 1 to 7 days and can be extended up to 24 more hours on the request of such member. IBBI has however, clarified that the Resolution Professional shall not extend the voting window in case the requisite majority vote has been obtained and one extension has already been granted to such member of the CoC.
    • Regulation 35(2) of the CIRP has been amended to enable the CoC members to take an informed decision and mandates sharing of valuation reports including the liquidation value and fair value of the Corporate Debtor with every member of the CoC on receipt of confidentiality undertaking 
    • Regulation 36(2)(ka) has been inserted in the CIRP Regulations to clarify that the CoC may decide not to disclose the fair value of the Corporate Debtor if they deem it beneficial for the resolution process.
    • Regulation 38(4) and (5) have been inserted in the CIRP Regulations to empower the CoC to consider the requirement of a monitoring committee for the implementation of the resolution process and decide the constitution of such committee. The Regulations clarify that in the event the Resolution Professional of the Corporate Debtor is proposed to be a part of the monitoring committee, his monthly fee shall not exceed the fees paid to him during the CIRP.
    • Regulation 40 of the CIRP Regulations has been amended to clarify that the Resolution Professional shall continue to discharge his duties under the IBC during the pendency of an extension application before the Adjudicating Authority.

Insolvency and Bankruptcy Board of India (Voluntary Liquidation Process) (Amendment) Regulations, 2024

  • The IBBI vide notification dated January 31, 2024 notified the IBBI (Voluntary Liquidation Process) (Amendment) Regulations, 2024 (Voluntary Liquidation Amendment Regulations).
  • In order to streamline the process, IBBI has caused amendment in Regulations 3(1), 8(1), 37 and 39 of the IBBI (Voluntary Liquidation Process) Regulations, 2016 (Voluntary Liquidation Regulations) by way of Voluntary Liquidation Amendment Regulations, as detailed below.

    • Sub-regulation (iii) has been inserted in Regulation 3(1)(a) and in Regulation 3(1)(b) to mandate adequate disclosure about pending proceedings in respect of the Corporate Debtor and provisioning to meet obligations arising out of such proceedings.
    • Regulation 37 of the Voluntary Liquidation Regulations have been amended to state that in case the process continues for a period longer than 360 days (270 days extended by 90 days, as the case may be), the Liquidator shall convene meeting of the contributories within 15 days of expiry of such period and present a status report indicting progress in liquidation including the reasons for non-completion of the liquidation process during the stipulated period. This Status Report shall also be filed with the IBBI within a period of 7 days from the meeting of contributories.
    • In order to facilitate distribution of the unclaimed amount, Regulation 39 of the Voluntary Liquidation Regulations providing for the CL Account of the Corporate Debtor has been amended to lay down the process of withdrawal of any amount from the CL Account by any person including the stakeholders. Prior to dissolution of a corporate person, any person claiming to be entitled to any amount deposited in the Corporate Liquidation Account may request the Liquidator for withdrawal of such amount in Form-I. After verification of such claim, the Liquidator shall forward this request to IBBI, who in turn may release this amount to the Liquidator for onward distribution. The amendment further mandates intimation of such distribution to the Adjudicating Authority. However, after dissolution, any person claiming to be entitled to any amount deposited in the Corporate Liquidation Account may apply to the IBBI in Form-I for and order for withdrawal of such amount.

Insolvency and Bankruptcy Board of India (Insolvency Professionals) (Amendment) Regulations, 2024

  • The IBBI vide notification dated January 31, 2024 notified the IBBI (Insolvency Professionals) (Amendment) Regulations, 2024 (IP Amendment Regulations).
  • IBBI has inserted Regulation 22A and has caused amendment in Regulations 23B and 23C of the IBBI (Insolvency Professional) Regulations, 2016 (IP Regulations) by way of IP Amendment Regulations, as detailed below.
    • Regulation 22A has been inserted to mandate approval of the Adjudicating Authority for resignation of the Insolvency Professional from any assignment. It has been clarified that the Insolvency Professional shall be required to discharge his duties till the approval of such resignation by the Adjudicating Authority.
    • Regulations 23B and 23C have been amended to clarify that an Insolvency Professional who is an Insolvency Professional Entity (IPE) may engage any of its directors/partners for any work relating to its assignment other than work related to valuation and audit of a debtor.

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