Amendments in the Insolvency & Bankruptcy Law
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IBBI Updates February 2023
1. IBBI (Insolvency Professionals) (Amendment) Regulations, 2024
IBBI vide Notification dated January 31, 2024, and Press Release dated February 02, 2024, notified the IBBI (Insolvency Professionals) (Amendment) Regulations, 2024.
In the First Schedule (Code of Conduct for Insolvency Professionals) following amendments have been made:
- A new clause 22A has been inserted which states the following:
An Insolvency Professional (“IP”) can now resign from the assignment, subject to the recommendation of the Committee of Creditors in a Corporate Insolvency Resolution Process, the Consultation Committee in the Liquidation Process, the Debtor or the Creditor in the Insolvency Resolution Process of the Personal guarantor to the corporate debtor, as the case may be, and the approval of the Adjudicating Authority (AA). However, the IP shall continue to discharge his duties, functions, and responsibilities till approval of the resignation by the AA. - In Clause 23B, an explanation has been inserted as follows:
The IP which is an Insolvency Professional Entity may engage or appoint its partners or directors, as the case may be, for or in connection with any work relating to any of its assignment other than work related to the valuation and audit of the debtor. - In Clause 23C, a new explanation 2 has been inserted as follows:
IP which is an Insolvency Professional Entity may provide any service, other than service related to valuation and audit, for or in connection with the assignment which is being undertaken by any of its partners or directors, as the case may be.
The link for the aforesaid Notification is as follows:
https://ibbi.gov.in/uploads/legalframwork/a7a359aacd94644a98e94f6df3e0eb87.pdf
The link for the aforesaid Press Release is as follows:
https://ibbi.gov.in//uploads/press/774259c4b57594c5cf75154700fc4a56.pdf
2. IBBI (Model Bye-Laws and Governing Board of Insolvency Professional Agencies) (Amendment) Regulations, 2024
IBBI vide Notification dated January 31, 2024, and Press Release dated February 02, 2024, notified the IBBI (Model Bye-Laws and Governing Board of Insolvency Professional Agencies) (Amendment) Regulations, 2024.
In the Schedule of Model Bye-Laws of An Insolvency Professional Agency, Para VI (Professional Membership), Clause 12A (Authorization for Assignment), Sub Clause (6) has been substituted as follows:
An authorization for assignment issued or renewed by the Agency shall be valid for 1 year from the date of its issuance or renewal, as the case may be.
An authorization for assignment issued or renewed by the Agency shall be valid till 30th June of the year where the expiry of the period of 1 year falls from 1st January to 30th June, or till 31st December of the year where the expiry of the period of 1 year falls from 1st July to 31st December.
If the professional member attains the age of 70 years during this period, the authorization for assignment shall be valid till such date
The link for the aforesaid Notification is as follows:
https://ibbi.gov.in/uploads/legalframwork/2024-02-01-212642-qznth b07b176dfa0a43a56f7bafeab096455d.pdf
The link for the aforesaid Press Release is as follows:
https://ibbi.gov.in//uploads/press/774259c4b57594c5cf75154700fc4a56.pdf
3. IBBI (Voluntary Liquidation Process) (Amendment) Regulations, 2024
IBBI vide Notification dated January 31, 2024, notified the IBBI (Voluntary Liquidation Process) (Amendment) Regulations, 2024.
In Regulation 3 (Initiation of Liquidation):
Disclosure about pending proceedings before statutory authorities, and pending litigations, in respect of Corporate Debtor (CD) is to be given with the Director’s affidavit along with an affirmation in the affidavit that the CD has made sufficient provision to meet the obligations arising on account of pending matters.
In Regulation 8 (Reporting):
From the list of documents that the liquidator has to prepare and submit, in the “annual status report”, the word “annual” has been omitted.
In Regulation 37 (Completion of Liquidation):
- If the Voluntary Liquidation Process is not concluded within the time limit of 90/270 days, as the case may be, a meeting of contributories is to be called within 15 days from the conclusion of every 90/270 days.
- Status Report to also contain reasons for not completing the Voluntary Liquidation Process within the timeline prescribed.
- Status Report to be filed with the Board within 7 days from the date of the meeting of contributories by liquidator.
In Regulation 39 (Corporate Voluntary Liquidation Account):
Sub-regulation 7 has been substituted as follows:
- Prior to the dissolution of the Corporate Person, a stakeholder, who claims to be entitled to any amount deposited into the Corporate Voluntary Liquidation Account, may apply to the liquidator in Form-I for withdrawal of the amount.
- On receipt of the request, the liquidator after verification of the claim, requests the Board to release the amount to him for onward distribution.
- The Board, upon receipt of the request from the liquidator, may release the requested amount to the liquidator for onward distribution.
- Once distribution to stakeholders is completed, the liquidator will notify the Adjudicating Authority of the distribution.
- After dissolution of the corporate person, a stakeholder, who claims to be entitled to any amount deposited into the Corporate Voluntary Liquidation Account, may apply to the Board in Form-I for an order for withdrawal of the amount.
- If any other person other than the stakeholder claims to be entitled to any amount deposited to the Corporate Voluntary Liquidation Account, he shall submit evidence to satisfy the liquidator or the Board, as the case may be, that he is so entitled.
The link for the aforesaid Notification is as follows:
https://ibbi.gov.in/uploads/legalframwork/667534e8060790dcea7ac0a622a47db5.pdf
The link for the Press Release is as follows: –
https://ibbi.gov.in/uploads/press/0572262504d462cb2d4d0e2220513617.pdf
4. IBBI (Bankruptcy Process for Personal Guarantors to Corporate Debtors) (Amendment) Regulations, 2024
IBBI vide Notification dated January 31, 2024, notified the IBBI (Bankruptcy Process for Personal Guarantors to Corporate Debtors) (Amendment) Regulations, 2024.
In Regulation 3 (Eligibility of Bankruptcy Trustee): the explanation to sub-section (1) has been amended which states that the Insolvency Professional (IP) acting as the bankruptcy trustee shall be considered independent of the personal guarantor if a) the IP is not an associate of the guarantor; and (b) the IP is not a related party of the corporate debtor.
The earlier criteria that the IP has not acted or is not acting as an interim resolution professional, resolution professional, or liquidator in respect of the corporate debtor is now omitted.
In Regulation 5 (Appointment of Professionals), now an insolvency professional who has acted or is acting as an interim resolution professional, a resolution professional, or a liquidator in respect of the corporate debtor can also be appointed as a professional to assist the bankruptcy trustee.
The link for the aforesaid Notification is as follows:
https://ibbi.gov.in/uploads/legalframwork/5cb7e53fe00352c0e4846fcef09c1591.pdf
The link for the aforesaid Press Release is as follows:
https://ibbi.gov.in/uploads/press/2024-02-05-120650-rmnye- c4fbbf6e847bcaa109759a22b593be37.pdf
5. IBBI (Insolvency Resolution Process for Personal Guarantors to Corporate Debtors) (Amendment) Regulations, 2024
IBBI vide Notification dated January 31, 2024, notified the IBBI (Insolvency Resolution Process for Personal Guarantors to Corporate Debtors) (Amendment) Regulations, 2024.
In Regulation 4 (Eligibility of Resolution Professionals), the explanation to sub-section (1) has been amended which states that a person shall be considered independent of the guarantor if he a) the IP is not an associate of the guarantor, and (b) the IP is not a related party of the corporate debtor.
The earlier criteria that the IP has not acted or is not acting as an interim resolution professional, resolution professional, or liquidator in respect of the corporate debtor is now omitted.
A new Regulation 17A (Meeting of the Creditors) has been inserted which states that the Resolution Professional shall place the repayment plan, as mentioned in Section 105 (Repayment Plan) of the Code, in a meeting of the creditors for consideration. If no repayment plan is received within the period specified in Section 106 (Report of resolution professional on a repayment plan) of the Code, the resolution professional shall notify about the same to the creditors in their meeting.
The link for the aforesaid Notification is as follows:
https://ibbi.gov.in/uploads/legalframwork/0a00165d04c84a48150a1679aa78d4b4.pdf
The link for the aforesaid Press Release is as follows:
https://ibbi.gov.in/uploads/press/2024-02-05-120650-rmnye- c4fbbf6e847bcaa109759a22b593be37.pdf
6. Measures for rationalization of the regulatory framework of Insolvency Professional Entities
IBBI vide Circular dated February 01, 2024, issued measures for rationalisation of the regulatory framework of Insolvency Professional Entities (IPE). This circular shall apply to All Registered Insolvency Professionals (IPs), All Recognised IPEs, and All Registered Insolvency Professional Agencies (IPAs). This Circular aims to focus on refining the regulatory framework for IPEs.
The following Key Clarifications are provided by the IBBI to support IPEs in their broadened responsibilities:
● Clarification in relation to disciplinary proceedings in case of an IP which is an IPE
In view of Regulation 11 (Consideration of Report) of IBBI (Inspection and Investigation) Regulations, 2017, it is clarified that in case the assignment is undertaken by the IP, which is an IPE, the show-cause notice shall be issued to:
- its partner or director, as the case may be, who is an IP and was authorized to sign and act on behalf of it for the respective assignment; and/or
- the IPE if in the opinion of the Board, there are either repeated instances of contravention against one or more partners or directors of the IPE or instances of systemic failure on the part of such IPE.
- Clarification on the applicability of the limit on the number of Assignments to an IP which is an IPE
In view of Clause 22 (Occupation, employability, and restrictions) of the First Schedule of the IBBI (Insolvency Professionals) Regulations, 2016, it is clarified that restriction on the number of assignments that can be undertaken by an IP would not apply to an IP which is an IPE. - Clarification on the applicability of fee structure to an IP which is an IPE
It is clarified that the fee structure as per Regulation 34B (Fee to be paid to interim resolution professional and resolution professional) of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 does not apply to an IP which is an IPE.
The link for the aforesaid Circular is as follows:
https://ibbi.gov.in/uploads/legalframwork/7b341d61f32e0710d0d022484f156ca2.pdf
7. Measures for facilitating efficient conduct of the processes by the Insolvency Professionals
8. Sharing of the Report prepared by the Resolution Professional (RP) under section 99 of the Insolvency and Bankruptcy Code, 2016 to both debtor and creditor
During the insolvency resolution process, the RP reviews applications filed under section 94 (Application by debtor to initiate insolvency resolution process) or 95 (Application by creditor to initiate insolvency resolution process) of the Code. They then submit a report to the Adjudicating Authority, recommending approval or rejection of the application. As per section 99(10) of the Code, the RP must also share a copy of this report with the debtor or creditor involved. In some cases, RPs haven’t shared the report with both the debtor and creditor, causing unequal access to information.
Therefore, IBBI vide Circular dated February 12, 2024, advised sharing of the Report prepared by the RP under Section 99 (Submission of report by RP) of the Insolvency and Bankruptcy Code, 2016 (the Code) to both debtor and creditor in all cases. This will ensure that the debtor and the creditor are well-informed about the evaluation and recommendations made by the RP, thereby promoting transparency and informed decision-making.
The link for the aforesaid Circular is as follows:
https://ibbi.gov.in/uploads/legalframwork/0ed6df8b1d8f1ef6bb762a375645a02b.pdf
9. IBBI (Liquidation Process) (Amendment) Regulations, 2024
IBBI vide Notification dated February 12, 2024, notified the IBBI (Insolvency Professionals) (Amendment) Regulations, 2024.
The key amendments are as follows:
● Regulation 2B: Compromise or Arrangement
The second proviso to sub-regulation (1) has been substituted and it now states that the Liquidator shall file the proposal of compromise or arrangement only in cases where such recommendation has been made by the committee under Regulation 39BA of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016. The Liquidator shall not file such a proposal after the expiry of 30 days from the liquidation commencement date.
● Regulation 14: Early Dissolution
The Liquidator shall consult the Consultation Committee and if it advises for early dissolution, the Liquidator may apply, along with a detailed report incorporating the views of the Consultation Committee, to the Adjudicating Authority.
● Regulation 31A: Stakeholders’ Consultation Committee (SCC)
Liquidators to regularly inform the Consultation Committee:
- the actual liquidation cost along with reasons for exceeding the estimated cost, if any,
- the consolidated status of all the legal proceedings, and
- the progress made in the process.
- The term “voting” has been defined as to mean voting cast by the representatives of the Consultation Committee.
● Regulation32A: Sale as a going concern
- Sale of the corporate debtor as a going concern cannot be offered as the only option for bidders after the first auction.
- A new sub-regulation (5) has been inserted which states that where the liquidator is of the opinion that it is viable to run the corporate debtor as a going concern, the liquidator shall consult the Consultation Committee and only on its advice he shall run the affairs of the corporate debtor as a going concern to the extent approved.
● Regulation 33: Mode of Sale
The liquidator can now make a private sale of the assets of the corporate debtor only after prior consultation with the consultation committee. Further, prior consultation with the consultation committee is now not required if the asset is sold at a higher price than the reserve price of a failed auction.
● Regulation35: Valuation of assets intended to be sold, new sub-regulations (5) to (7) have been inserted
- Where a fresh valuation is undertaken, the liquidator shall facilitate a meeting wherein the registered valuers shall explain the methodology being adopted to arrive at valuation to the consultation committee before the finalization of valuation reports.
- The liquidator shall share the valuation reports with the members of the consultation committee after obtaining an undertaking that they shall maintain the confidentiality of such reports and shall not use these reports to cause an undue gain or undue loss to itself or any other person.
- In case there is deviation of 25% in the valuation of an asset class from valuation under Regulation 35 of IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016, the liquidator shall facilitate a meeting wherein the registered valuers shall explain the reasons for the difference to the consultation committee.
● Regulation46: Corporate Liquidation Account
- Prior to dissolution of the corporate person, a stakeholder, who claims to be entitled to any amount deposited into the Corporate Liquidation Account, may apply to the liquidator in Form-I for withdrawal of the amount.
- On receipt of the request, the liquidator after verification of the claim, shall request the Board for release of the amount to him for onward distribution.
- The Board on receipt of the request may release the amount to the liquidator.
- The liquidator shall, after making the distribution to the stakeholder, inform the Adjudicating Authority of such distribution.
- After dissolution of the corporate person, a stakeholder, who claims to be entitled to any amount deposited in the Corporate Liquidation Account, may apply to the Board in Form-I for an order for withdrawal of the amount.
- If any person other than the stakeholder claims to be entitled to any amount deposited to the Corporate Liquidation Account, he shall submit evidence to satisfy the liquidator or the Board, as the case may be, that he is so entitled.
● Regulation 46A:Exclusion of certain assets from the liquidation estate
Where a corporate debtor has given possession to an allottee in a real estate project, such assets will not form a part of the liquidation estate of the corporate debtor.
● Schedule I: Mode of Sale
- The liquidator is now required to mention in the auction notice, the period extended beyond 90 days for payment of balance sale consideration.
- Clause (4), (4A), and (4B) have been substituted as follows:
- The reserve price shall be the value of the asset arrived at in accordance with Regulation 35 and where an auction fails, the reserve price in subsequent auctions may be further reduced by not more than 10% at a time. However, in cases where the reserve price of the failed auction of the asset was fixed as per the valuation under Regulation 35(1), the liquidator may, on the advice of the consultation committee, reduce the reserve price up to 25%, once during the process.
- Clause (12) has been substituted as follows:
- On the close of the auction, the highest bidder shall be invited to provide balance sale consideration within 90 days or such period as mentioned in the auction notice, of the date of such demand. However, if the payments are made after 30 days, it shall attract 12% interest. The sale shall be cancelled if the payment is not received within the period provided.
- A new Clause (3A) has been inserted in Para 2: The private sale shall now be confirmed to the buyer after consultation with the consultation committee under regulation 33.
● Schedule II
The Form A (Proforma for Reporting Consultations with Stakeholders) provided under principal regulations in Schedule II has been substituted, a copy of which has been provided in the said Notification.
The link for the aforesaid Notification is as follows: –
https://ibbi.gov.in/uploads/legalframwork/790016d91e25c04925c7b57c179c9e7a.pdf
The link for the aforesaid Press Release is as follows: –
https://ibbi.gov.in/uploads/press/238287e0bf8274f248fb2582e7aa1fac.pdf
10. Reporting / Sharing of information in the Voluntary Liquidation process
The Code provides for the voluntary liquidation process of corporate persons. However, the definition of ‘corporate person’ in section 3(7) excludes any Financial Service Provider (FSP). Section 227 read with IBBI (Insolvency and Liquidation Proceedings of Financial Service Providers and Application to Adjudicating Authority) Rules, 2019 allows FSPs who have been notified by the Central Government, after consulting financial regulators, to undergo a voluntary liquidation process after obtaining prior permission of the appropriate regulator. It has been noted that some FSPs have commenced the voluntary liquidation process without notification and/or prior permission of the appropriate financial regulator.
Accordingly, RBI on February 13, 2024, directed that the liquidator shall ensure that, if the corporate person is categorized as a financial service provider, it shall declare that
- the category of FSP has been notified by the Central Government under section 227 of the Code, and
- the corporate person has obtained prior permission from the appropriate regulator.
It is also directed that the liquidator shall submit a copy of Form H and the final report filed before the Adjudicating Authority as per Regulation 38, and the order for dissolution to the Board to the email ID: liqvol@ibbi.gov.in
The link for the aforesaid circular is as follows: –
https://ibbi.gov.in/uploads/legalframwork/10b40f99875af3eceda569e977c2d1a6.pdf
11. Deposit and withdrawal of unclaimed dividends and/or undistributed proceeds in accordance with regulation 39 of the IBBI (Voluntary Liquidation Process) Regulations, 2017.
Regulation 39 of IBBI (Voluntary Liquidation Process) Regulations, 2017 provides a framework for the management of unclaimed deposits and undistributed proceeds during the voluntary liquidation process. As per the regulation, liquidators are mandated to deposit unclaimed/undistributed amounts into the Corporate Voluntary Liquidation Account and inform the Board in Form-G containing the details regarding the stakeholders entitled to such deposited amount.
To facilitate the request received from a stakeholder, under regulation 39(7), who claims to be entitled to any amount deposited into the Corporate Voluntary Liquidation Account for withdrawal before the dissolution of the corporate person, the liquidator shall apply to the Board in Form-G as issued by IBBI vide Circular dated February 13, 2024 (format as per Annexure), for the release of the amount for onward distribution to the stakeholders.
The link for the aforesaid circular is as follows: –
https://ibbi.gov.in/uploads/legalframwork/e0eb050c966002846267b7ef7e9fd5de.pdf
12. Framework for use of Mediation under the Insolvency and Bankruptcy Code, 2016
An Expert Committee constituted by the Board issued a Framework for the Use of Mediation under the Insolvency and Bankruptcy Code, 2016 on February 14, 2024. The Expert Committee recommended the introduction of voluntary mediation as a dispute resolution mechanism under the Insolvency and Bankruptcy Code (Code).
The objective of the framework includes:
- Expediting resolution of insolvency cases and related issues by legislative recognition of voluntary mediation under code
- Reduction of caseload of NCLT
- Providing a specialist mechanism and infrastructure for resolving insolvency disputes
- Mediation to be a parallel process. Timeline under Code to remain inviolable.
- Phased Implementation
- Increasing Awareness
- Fostering Insolvency Mediation Culture
Key Recommendations include:
- The mediation framework should be self-contained within the Code, with independent infrastructure to meet its objectives.
- In-rem rights and public interest are involved, so seeking exemption through a specific amendment or notification is best.
- The Committee suggests gradually introducing voluntary mediation while keeping existing timelines.
- The framework’s key aspects are independence and flexibility for quick learning and implementation.
The Committee has sought to balance the Code’s core goals of ‘timely reorganization’ and ‘value maximization’ while allowing parties to choose ‘out-of-court’ mediation voluntarily, thereby boosting the efficiency of the insolvency resolution process.
The link for the aforesaid Framework is as follows:
https://ibbi.gov.in/uploads/whatsnew/1256aa8a9e2c89bd09d8186dae2e6019.pdf
The link for the aforesaid Press Release is as follows: –
https://ibbi.gov.in/uploads/press/e5b542647a81dc8260b66ced4cf4502e.pdf
13. IBBI (Insolvency Resolution Process for Corporate Persons) (Amendment) Regulations, 2024
IBBI vide Notification dated February 15, 2024, and Press Release dated February 16, 2024, notified the IBBI (Insolvency Resolution Process for Corporate Persons) (Amendment) Regulations, 2024.
To streamline the Corporate Insolvency Resolution Process, the following amendments are made:
● Regulation 4D: Separate bank account for real estate project
A new Regulation 4D has been inserted which states that where the corporate debtor has any real estate project, the Interim Resolution Professional or the Resolution Professional, as the case may be, shall operate a separate bank account for each real estate project.”
● Regulation 18: Meetings of the committee
Sub-Regulation 18(1) has been substituted as follows:
A Resolution Professional shall convene a meeting of the committee before the lapse of 30 days from the last meeting. However, the committee may decide to extend the interval between such meetings subject to the condition that there shall be at least 1 meeting in each quarter.
● Regulation 25: Voting by the Committee
Sub-Regulation 25(5)(b) has been substituted as follows:
The Resolution Professional shall seek a vote of the members who did not vote at the meeting on the matters listed for voting, by electronic voting system in accordance with regulation 26 where the voting shall be kept open, from the circulation of the minutes, for such time as decided by the committee which shall not be less than 24 hours and shall not exceed 7 days.
However, on a request for extension made by a creditor, the voting window shall be extended in increments of 24 hours period. The Resolution Professional shall not extend the voting window where the matters listed for voting have already received the requisite majority vote and one extension has been given after the receipt of the requisite majority vote.
● Regulation 31B: Approval of Committee for Insolvency Resolution Process cost
A new Regulation 31B has been inserted which states that the Insolvency Professional shall place in each meeting of the committee, the operational status of the corporate debtor and shall seek its approval for all costs, which are part of Insolvency Resolution Process costs.
● Regulation 35: Valuation methodology
A proviso has been inserted after Regulation 35(1)(a) which states that the Resolution Professional shall facilitate a meeting wherein registered valuers shall explain the methodology being adopted to arrive at valuation to the members of the committee before computation of estimates.
● Regulation 35: Confidentiality of Reports
Sub-Regulation 35(2) has been substituted as follows:
After the receipt of resolution plans in accordance with the Code and these regulations, the Resolution Professional shall provide the fair value, the liquidation value, and valuation reports to every member of the committee in electronic form, upon receiving an undertaking from the member to the effect that such member shall maintain confidentiality of the fair value, the liquidation value and valuation reports and shall not use the information contained in the valuation reports to cause an undue gain or undue loss to itself or any other person and comply with the requirements under section 29(2).
● Regulation 36: Committee’s decision on Withholding Fair Value Information
A new sub-regulation 36(2)(ka) has been inserted which states that the committee may decide not to disclose the fair value if, for reasons to be recorded in writing, it considers such non-disclosure to be beneficial for the resolution process.
● Regulation 36A-Separate Resolution plan for each Real estate project
A clarification has been inserted which states that the Resolution Professional after the approval of the committee may invite a resolution plan for each real estate project or group of projects of the corporate debtor.
● Regulation 38: Monitoring Committee
New sub-regulations (4) and (5) have been inserted as follows:
The committee may consider the requirement of a monitoring committee for the implementation of the Resolution Plan.
Where the committee considers that a monitoring committee for the implementation of the Resolution Plan is required, it may, while approving the Resolution Plan, decide to constitute the same with the Resolution Professional or propose another Insolvency Professional, or any other person as its member. However, where the Resolution Professional is proposed to be part of the monitoring committee, the monthly fee payable to him shall not exceed the monthly fee received by him during the Corporate Insolvency Resolution Process.
● Regulation 40: Continuation of Resolution Proceedings until Extension Application
A clarification has been inserted which states that the resolution professional shall continue to discharge his responsibilities under the Corporate Insolvency Resolution Process, till the application for extension is decided by the Adjudicating Authority.
The link for the aforesaid Notification is as follows: –
https://ibbi.gov.in/uploads/legalframwork/88458173f47fbda03d775370a420f307.pdf
The link for the aforesaid Press Release is as follows: –
https://ibbi.gov.in/uploads/whatsnew/63188e4b34fe3b376995a1f5dd4b22fe.pdf
14. Enhancing Transparency and Stakeholder Engagement in Liquidation Process
IBBI vide Circular dated February 22, 2024, mandated circulation of Progress Report to Stakeholders. This Circular aims to enhance transparency and stakeholder engagement in the liquidation process.
Regulation 15 (Progress Report) of the IBBI (Liquidation Process) Regulations, 2016, provides that the Liquidator should submit Progress Reports, to the Adjudicating Authority (AA) and the Board within 15 days after the end of every quarter. Though the regulation provides the submission of progress reports to the AA and the Board, it does not get shared with the key stakeholders of the ecosystem, i.e., creditors, thus leaving them unaware of the progress in the process thereby creating information asymmetry.
It is hereby directed that the liquidator shall also share the progress reports with the members of the Stakeholders’ Consultation Committee (SCC) after receiving a confidential undertaking. Further, the liquidator shall submit the progress reports under Regulation 15 till the filing of the final report under Regulation 45.
Regulation 13 (Preliminary Report) of the IBBI (Liquidation Process) Regulations, 2016 mandates the liquidator to submit a Preliminary Report to the AA, outlining various aspects of the corporate debtor and the intended plan of action for carrying out the liquidation process.
It is hereby directed that the liquidator shall seek suggestions/observations of the members of the SCC while preparing the Preliminary Report under regulation 13 and finalize the Preliminary Report after considering such suggestions/observations, and thereafter, submit it to the AA, Board, and members of SCC.
Sharing of the final report, Form H, and process closure/dissolution order with IBBI
The liquidator shall submit a copy of Form H along with the final report filed before the AA as per Regulation 45, and the order for process closure/dissolution to the Board to the email ID: liq.cirp@ibbi.gov.in.
The link for the aforesaid Circular is as follows: –
https://ibbi.gov.in//uploads/legalframwork/ebdbf10dbd0e11662bd6dbf2b02ca7fe.pdf
15. Deposit and withdrawal of unclaimed dividends and/or undistributed proceeds in accordance with regulation 46 of the IBBI (Liquidation Process) Regulations, 2016
Regulation 46 of the IBBI (Liquidation Process) Regulations, 2016 provides a framework for the management of unclaimed deposits and undistributed proceeds during the liquidation process. As per the regulation, liquidators are mandated to deposit unclaimed/undistributed amounts into the Corporate Liquidation Account and inform the Board in Form-I of the Liquidation Regulations.
To facilitate the request received from a stakeholder, under regulation 46(7), who claims to be entitled to any amount deposited into the Corporate Liquidation Account for withdrawal before the dissolution of the corporate debtor, the liquidator, after due verification, shall apply to the Board in the form as per Annexure as prescribed in the Circular dated February 22, 2024, for the release of the amount for onward distribution to such stakeholder.
The link for the aforesaid Circular is as follows: –
https://ibbi.gov.in//uploads/legalframwork/d578543c7d3d9447faf0089802820ec2.pdf