On 12-2-2024, the Insolvency and Bankruptcy Board of India (‘IBBI’) notified the Insolvency and Bankruptcy Board of India (Liquidation Process) (Amendment) Regulations, 2024 to amend the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016. The provisions came into force on 12-2-2024.
Key Points:
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Under the revised regulations, the liquidator will file the proposal of compromise/ arrangement, proposed under Section 230 of the Companies Act, 2013, only in cases where such recommendation has been made by the committee under regulation 39-BA of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016. The compromise/ arrangement should be completed within 90 days of order of liquidation.
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Regulation 31-A relating to “Stakeholders’ consultation committee” has been revised.
The following sub-regulations been inserted:
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Sub- regulation 6-A- In all cases where the liquidator proposes to continue/ initiate any legal proceeding, he will have to seek the advice of the consultation committee after presenting the economic rationale for the proposal.
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Sub- regulation 6-B- Liquidator, in every meeting, will have to present the following to the committee:
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actual liquidation cost along with reasons for exceeding the estimated cost
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consolidated status of all the legal proceedings
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progress made in the process
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Regulation 35 relating to “Valuation of assets or business intended to be sold” has been revised.
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In case, where a fresh valuation is undertaken, the liquidator will have to facilitate a meeting wherein registered valuers shall explain the methodology being adopted to arrive at valuation to the consultation committee before finalization of valuation reports.
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Liquidator will share the valuation reports with the committee after obtaining a undertaking of confidentiality.
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In case of deviation of 25% in valuation, the registered valuers will have to explain the reasons for difference.
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Regulation 47 relating to “Corporate Liquidation Account” has been revised.
In cases where a stakeholder claims to be entitled to any amount deposited in the Corporate Liquidation Account, can apply to liquidator in Form-I for withdrawal.
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Prior to dissolution-
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Liquidator will request the Board to release the amount.
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After distribution of the amount, the Liquidator will intimate the same to the Adjudicating Authority.
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After dissolution- If any person other than the stakeholder claims to be entitled to any amount deposited to the Corporate Liquidation Account, he will have to submit evidence to satisfy the liquidator or the Board.
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Regulation 46-A has been inserted which relates to “Exclusion of certain assets from the liquidation estate”.
Where a corporate debtor has given possession to an allottee in a real estate project, such assets will not form a part of the liquidation estate of the corporate debtor.
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Form A relating to “Proforma for reporting consultations with stakeholders” has been revised.
