The Insolvency and Bankruptcy Board of India (“IBBI”) introduces amendments to the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 (“CIRP Regulations”)

By INSOL INDIA EDITORIAL Posted On : February 20, 2019

The IBBI, with a view to discourage persons, other than genuine, capable and credible resolution applicants, to submit resolution plans in relation to the corporate insolvency resolution process of a corporate debtor, had introduced certain amendments to the CIRP Regulations vide the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) (Amendment) Regulations, 2019 (“CIRP Amendment Regulations”) January 24, 2019. The major amendments introduced by the CIRP Amendment Regulations are as follows:

 

  • Request for resolution plans to be issued by the resolution professional is to require resolution applicants to provide a performance security, in case the resolution plan submitted by the resolution applicant is approved by the committee of creditors. The nature, value, duration and source of the performance security will be such as may be prescribed in the request for resolution plans with the approval of the committee of creditors, having regard to the nature of the resolution plan and the business of the corporate debtor. The performance security can also be specified in absolute terms;
  • Resolution professionals are required to attach evidence of receipt of performance security along with the resolution plan approved by the committee of creditors, to the adjudicating authority for its approval. The ‘Form H’, as specified under the CIRP Regulations, which is required to be filed by resolution professionals with the adjudicating authority has been revised to take this into account;
  • The performance security provided by resolution applicants will stand forfeited in case the resolution applicant, after approval of the resolution plan by the adjudicating authority, fails to implement or contributed to the failure of implementation of the resolution plan;
  • Resolution plans are required to include a statement as to whether the resolution applicant or any of its related parties has failed to implement or contributed to the failure of implementation of any resolution plan approved by the adjudicating authority, at any time in the past; and
  • A creditor, who is aggrieved by non-implementation of a resolution plan which has been approved by the adjudicating authority, is permitted to apply to the adjudicating authority for appropriate directions.