Amendments in the Insolvency & Bankruptcy Law
IBBI Updates August 2024
1. Guidelines For Committee of Creditors
IBBI on August 06, 2024, issued guidelines under the Insolvency and Bankruptcy Code, 2016 for the Committee of Creditors (CoC) to foster more effective and time-bound decision-making by the CoC members. These guidelines shall be effective immediately.
These self-regulating guidelines are being issued, to stem the value erosion, through curtailment of procedural delays and enhancement of transparency and coordinated approach of decision-making by the members of the CoC.
These Guidelines help the members of the CoC to
- follow relevant provisions of the IBC Code with Objectivity and Integrity,
- remain independent and act impartially
- supervise and facilitate the Insolvency Professional, and endeavour to resolve any inter-se disputes between the members
- ensure at all times complete adherence to the undertaking regarding confidentiality of information.
- take necessary measures to ensure that the insolvency resolution process cost is reasonable.
- regularly monitor the activities of the Insolvency Professional
- proactively share the latest financial statements, and relevant extracts from the audits of the corporate debtor, conducted by the creditors such as stock audits, transaction audits, forensic audits, etc. and other relevant information available, with the Insolvency Professional to enable efficient conduct of the process
- carefully review and assess the information memorandum prepared by Insolvency Professional and offer additional insights.
- contribute to the preparation of the marketing strategy by the Insolvency Professional and may also take measures for marketing of the assets of the corporate debtor, if necessary.
- ensure that all resolution plans as received by Insolvency Professionals are placed before CoC.
- suitably consider the requirement of a monitoring committee for the implementation of the resolution plan
This will help in a resolution under the Code in a time-bound manner in the interest of maximization of the value of the assets of the corporate debtor.
The link to the aforesaid Circular is as follows:
https://ibbi.gov.in//uploads/legalframwork/db3d7327523500331bd793bed7835ff2.pdf
2. Generation of Valuation Report Identification Number for valuation conducted by Register Valuer under Insolvency and Bankruptcy Code, 2016
IBBI vide Circular IBBI/RV/75/2024 dated August 12, 2024, mandated the generation of a unique Valuation Report Identification Number (VRIN) for valuations conducted by Registered Valuers under the Insolvency and Bankruptcy Code, 2016 (IBC).
IBBI has been designated as an Authority under the Companies (Registered Valuers and Valuation) Rules, 2017 (the Rules) for the registration, monitoring, and development of valuers registered under the Rules read with section 247 of the Companies Act, 2013.
At present, any valuation under the provisions of IBC is done only by a Registered Valuer (RV)/ Register Valuers Entity (RVE). RV/RVEs submit the valuation reports upon their completion with or without mentioning any reference number.
To ensure authenticity and to have a unique reference number for the valuation reports, it has been decided to provide a Valuation Report Identification Number (VRIN) for each valuation conducted under IBC. Accordingly, an online module, in consultation with Registered Valuers Organisations, has been developed by IBBI. The RV/RVE shall access the module with the login credentials already provided by IBBI.
Before the submission of the valuation report, the respective RV/RVEs shall generate a unique VRIN for each valuation report. The RV/RVE shall mention the VRIN on the front page of the valuation report. A facility is also being provided on the IBBI website to allow stakeholders to verify the authenticity of the report by using VRIN. The IPs shall not accept any valuation reports without VRIN in all such cases.
The link to the aforesaid draft Circular is as follows:
https://ibbi.gov.in//uploads/legalframwork/fec61f0798e424d32aa521af3e82f344.pdf