Amendments in the Insolvency & Bankruptcy Law
IBBI Updates November 2024
1. Discussion paper on Mediation by the Operational Creditors (OCs) before approaching Adjudicating Authority (AA) u/s 9 of IBC, 2016
IBBI vide Discussion paper issued on November 04, 2024 has solicited Public Comments on the Proposal to have an option of Mediation which can be exercised by the Operational Creditors before filing of insolvency application under Section 9 of IBC, 2016.
It has been seen that in most of the cases which are initiated by the OCs, the OCs were more interested in repayment of their claims rather than admission of the insolvency application and large number of cases were settled before the admission of the application. Further it has been noted that the settlement rate of CIRP Pre admission for OCS is larger than at any other stage.
Thus, in order to resolve disputes between the OC and corporate debtor at the earliest stage, and facilitate faster admission by AA, mediation as an option may be considered as an effective tool.
The link for the aforesaid Circular is as follows:
04112024 DP – Mediation by OCs before approch AA us 9
2. Discussion Paper on issues related to Real Estate
IBBI vide Discussion paper issued on November 07, 2024 has solicited Public Comments on the proposals made after analyzing various issues related to Resolution of Real estate and matters therein. The discussion paper covers a range of critical areas, the issues therein and proposal for each as stated below:
- Proposed Inclusion of Land Authorities in Committee of Creditors (CoC) Meetings
- Handling Cancelled Land Allotments in Real Estate Insolvency Cases
- Empower CoC to Facilitate Participation of Associations of Allottees as Resolution Applicants
- Clarification about inclusion of Interest in Homebuyers’ Claims in CIRP
- Representation of large numbers of creditors through facilitators
- Proposal to disseminate Committee of Creditors (CoC) minutes of the meeting to all creditor in class of real estate projects
- Streamlining Possession Handover in Real Estate Projects
The link for the aforesaid Circular is as follows:
07112024 Discussion Paper on issues related to Real Estate
3. Discussion paper on Monitoring Committee under CIRP
IBBI vide Discussion paper issued on November 19, 2024 has solicited Public Comments on the Proposal to strengthen the regulatory framework governing monitoring committees under the IBC, 2016. While the current framework under Regulation 38 of the CIRP Regulations provide certain basic recognition to monitoring committees, the proposed amendments aim to make their constitution mandatory for implementation of all resolution plans.
The proposed framework empowers the CoC to take the final decision on the constitution, composition, and functioning period of the monitoring committee, as part of the resolution plan. The CoC shall retain the flexibility to decide for constitution of monitoring committee with lesser period if the resolution plan provides for substantial implementation during such tenure with recorded reasons.
The idea of this proposal is originated from the Judgment of the Hon’ble Supreme Court dated 7th November 2024 in the matter of State Bank of India & Ors v. The Consortium of Mr. Murari Lal Jalan and Mr. Florian Fritsch & Anr, where the Court emphasized on the need for statutory recognition of monitoring committees and made several key recommendations regarding their constitution and functioning.
The link for the aforesaid Circular is as follows:
19112024 DISCUSSION PAPER MONITORING COMMITTEE UNDER CIRP
4. Discussion paper on amendments to Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016 and Insolvency and Bankruptcy Board of India (Voluntary Liquidation Process) Regulations, 2017.
IBBI vide Discussion paper issued on November 19, 2024 has solicited Public Comments on the proposal to make various amendments to the liquidation process under the IBBI (Liquidation Process) Regulations, 2016 (Liquidation Regulations) and Insolvency and Bankruptcy Board of India (Voluntary Liquidation Process) Regulations, 2017.
Part A of the discussion paper proposes various changes in the liquidation regulations in relation to:
- Review of the auction Process
- ensuring transparency in compromise or arrangement schemes by mandating liquidator for applying closure of the liquidation process to the Adjudicating Authority and
- improving the management of unclaimed proceeds in the Corporate Liquidation account
Part B of the discussion paper proposes changes in the voluntary liquidation regulations in relation to:
- uncalled capital or unpaid capital contribution and
- improving the management of unclaimed proceeds in the Corporate Voluntary Liquidation account
The link for the aforesaid Circular is as follows:
19112024 Discussion Paper on amendments to Liq Reg, 2016 and VLP reg 2017