IBBI amends Insolvency and Bankruptcy Board of India Liquidation Process Regulations 2016 & Voluntary Liquidation Process Regulations 2017
The Insolvency and Bankruptcy Board of India notified the
Insolvency and Bankruptcy Board of India (Liquidation Process) (Second
Amendment) Regulations, 2022 (‘Amendment Liquidation Regulations’) and
Insolvency and Bankruptcy Board of India (Voluntary Liquidation Process)
(Second Amendment) Regulations, 2022 (‘Amendment Voluntary Liquidation
Regulations’) on 16th September, 2022.
To enable better
participation of stakeholders and streamline the liquidation process to reduce
delays and realise better value, the amendment in Liquidation Regulations make
the following major modifications:
·
The Committee of Creditors
(CoC) constituted during Corporate Insolvency Resolution Process (CIRP) shall
function as Stakeholders Consultation Committee (SCC) in the first 60 days.
After adjudication of claims and within 60 days of initiation of process, the
SCC shall be reconstituted based upon admitted claims.
·
The liquidator has been
mandated to conduct the meetings of SCC in a structured and time bound manner
with better participation of stakeholders.
·
The scope of mandatory
consultation by liquidator, with SCC has been enlarged. Now, SCC may even
propose replacement of liquidator to the Adjudicating Authority (AA) and fix
the fees of liquidator, if the CoC did not fix the same during CIRP.
·
If any claim is not filed
during liquidation process, then the amount of claim collated during CIRP shall
be verified by the liquidator.
·
Wherever the CoC decides
that the process of compromise or arrangement may be explored
during liquidation process, the
liquidator shall file application only in such cases before
Adjudicating Authority for considering the proposal of compromise or
arrangement, if any, within thirty days of the order of liquidation.
·
Specific event-based
timelines have been stipulated for auction process.
·
Before filing of an
application for dissolution or closure of the process, SCC shall advice the
liquidator, the manner in which proceedings in respect of avoidance
transactions or fraudulent or wrongful trading, shall be pursued after closure
of liquidation proceedings.
The Amendment
Liquidation Regulations and Amendment Voluntary Liquidation Regulations further
lay down the manner and period of retention of records relating to liquidation
and voluntary liquidation of a corporate debtor or corporate person,
respectively.
The Amendment
Liquidation Regulations and Amendment Voluntary Liquidation Regulations are
effective from 16th September, 2022.
These are available at www.mca.gov.in and www.ibbi.gov.in.