Insolvency and Bankruptcy Board of India
No. IBBI/PR/2022/36 || 17th September, 2022
Subject: Insolvency and Bankruptcy Board of India (IBBI) amends the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) (Fourth Amendment) Regulations, 2016
The Insolvency and Bankruptcy Board of India (IBBI/Board) notified the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons)(Fourth Amendment) Regulations, 2016 (CIRP Regulations) on 16th September, 2022.
With the objective to maximise value in resolution, the amendment enables the resolution professional (RP) and the Committee of creditors (CoC) to issue a request for a resolution plan a second time for the sale of one or more of the assets of the corporate debtor (CD) in cases where no resolution plan has been received for the corporate debtor as a whole. It enables for a resolution plan to include the sale of one or more assets of CD to one or more successful resolution applicants submitting resolution plans for such assets and providing for appropriate treatment of the remaining assets.
Further to improve the value received in the resolution plan, the amendment enables the marketing of assets of the CD. It provides for formulating a strategy for the marketing of assets of CD in consultation with the CoC to disseminate information about the asset to a wider and targeted audience of potential resolution applicants. The amendment also enables a longer time for the asset in the market as the invitation for expression of interest in Form G has been advanced to the 60th day from the insolvency commencement date (ICD). Changes have also been made to Form G to provide more relevant information to persons for expressing interest.
The amendment provides for the following changes to improve the information available to stakeholders:
Changes timeline for filing applications for preferential and other transactions on or before 130 th day of ICD. It provides that a copy of the application made regarding preferential and other transactions be shared with the prospective resolution applicants to enable them to account for such information while proposing the resolution plan.
Changes the timeline for submission of information memorandum to on or before 95th day from the ICD from 54th day. It also mandates that the information memorandum should include further relevant information such as operations of CD, financial statements, contingent liabilities, geographical coordinates of fixed assets, and a company overview. It also includes details of business evolution for CDs with more than Rs.100 crore asset size.
With the aim to reduce delays in the process and enhance the efficiency of available time the amendment enables the CoC to examine whether it wants to explore option of compromise or arrangement and file such a recommendation with AA while applying to AA for a liquidation order. In cases where it decides to explore, it should explore the option during the period, order for liquidation is awaited from the AA. The amendment also introduces guiding factors that may be considered by CoC while making an early decision to liquidate the CD. It also provides that the reasons be recorded based on these factors and presented to AA as part of the application for liquidation.
The amendment also provides the following to make the resolution process more transparent and robust:
A common email address is used throughout the CIRP, and Liquidation of a CD and this email needs to be handed over to the succeeding IP conducting the process.
The IRP/RP to communicate to the creditors of the corporate debtor (CD), as per the last available books of accounts, the public announcement and invite claims through post or electronic means.
It has been clarified that a meeting of COC can be convened till the resolution plan is approved or an order for liquidation is passed and matters which do not affect the resolution plan can be decided upon.
Download the Amended Regulation