The Insolvency and Bankruptcy Board of India (“IBBI”) introduces amendments to the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016 (“Liquidation Regulations”)
By INSOL India Editorial Board Posted On : September 18, 2019
The IBBI has introduced certain amendments to the Liquidation Regulations vide the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) (Amendment) Regulations, 2019 which came into force on July 25, 2019 (“Liquidation Amendment Regulations”).
Some of the key features of the Liquidation Amendment Regulations are as follows -
(a) A consultation committee of the stakeholders is required to be constituted within 60 days of the liquidation commencement date with certain number of representatives of each class of stakeholders. The role of the committee is limited to advise the liquidator by a vote of not less than 66% of the representatives of the stakeholders. If the liquidator decides differently from 66% of the representatives, the reasons therefor must be recorded in writing
(b) Similar to the CIRP regulations, a model time line for the liquidation process has also been introduced by the Liquidation Amendment Regulations and a compliance certificate is also required to be filed by the liquidator with the adjudicating authority upon completion of the liquidation process.
(c) Stakeholders can now update their claims submitted during the corporate insolvency resolution process of the corporate debtor, provided such updation is backed by a formal proof required for proving of claims as on the liquidation commencement date.
(d) A secured creditor is required to intimate its decision to relinquish security in a prescribed form within 30 days of public announcement for commencement of liquidation. In the event the secured creditor decides to realise the security, it must forego the value realised from security interest in favour of insolvency resolution process costs and liquidation costs and workmen dues for 24 months preceding the liquidation commencement date.
(e) The Liquidation Amendment Regulations have also introduced certain amendment to simply the process of sale of the corporate debtor as a going concern in case the committee of creditors of the corporate debtor have opted for sale of the corporate debtor as a going concern.
On account of the difficulty faced by the stakeholders, the IBBI pursuant to its circular dated 26th August, 2019 clarified that amendment will apply prospectively to liquidations commenced after 25th July, 2019.
For the full text of the Liquidation Amendment Regulations, please refer to the link
For more details please visit https://ibbi.gov.in/webadmin/pdf/whatsnew/2019/Jul/Liquidation%20Regulations%2025072019%20final%20English_2019-07-25%2020:13:32.pdf