Legislation UpdatesRules & Regulations

The Insolvency and Bankruptcy Board of India (IBBI) notified the Insolvency and Bankruptcy Board of India (Voluntary Liquidation Process) (Second Amendment) Regulations, 2020 on 05-08-2020.

The Insolvency and Bankruptcy Code, 2016 enables a corporate person to initiate voluntary liquidation process if it has no debt or it will be able to pay its debts fully from the proceeds of the assets. The corporate person appoints an insolvency professional to conduct the voluntary liquidation process by a resolution of members or partners, or contributories, as the case may be. However, there can be situations which may require appointment of another resolution professional as the liquidator.

The amendment made to the Regulations provides that the corporate person may replace the liquidator by appointing another insolvency professional as liquidator by a resolution of members or partners, or contributories, as the case may be.

NOTIFICATION


Insolvency and Bankruptcy Board of India

[Notification dt. 05-08-2020]

Legislation UpdatesRules & Regulations

The Insolvency and Bankruptcy Board of India (IBBI) notified the Insolvency and Bankruptcy Board of India (Liquidation Process) (Third Amendment) Regulations, 2020.

The Regulations require the committee of creditors to fix the fee payable to the liquidator.  Where the fee has not been fixed by the committee of creditors, the Regulations provide for a  fee as a percentage of the amount realised and of the amount distributed by the liquidator. There have been instances where a liquidator realises the amount while another liquidator distributes  the same to stakeholders. The amendment made to the Regulations today clarifies that where a  liquidator realises any amount, but does not distribute the same, he shall be entitled to a fee corresponding to the amount realised by him. Likewise, where a liquidator distributes any  amount, which is not realised by him, he shall be entitled to a fee corresponding to the amount distributed by him.


Read the regulations here: REGULATIONS

Insolvency and Bankruptcy Board of India

[Notification dt. 05-08-2020]

Legislation UpdatesRules & Regulations

Insolvency and Bankruptcy Board of India(Online Delivery of Educational Course and Continuing Professional Education by Insolvency Professional Agencies and Registered Valuers Organisations) Guidelines, 2020

  • Education by Insolvency Professional Agencies (IPAs)
  • Education by Registered Valuers Organisations (RVOs)
  • Delivery of Education
  • Online Delivery of Education

These Guidelines shall apply to delivery of:-

(a) Pre-registration educational course under regulation 5(b) of the IBBI (Insolvency Professionals) Regulations, 2016;

(b) Continuing professional education under clause (ba) of sub-regulation (2) of regulation 7 of the IBBI (Insolvency Professionals) Regulations, 2016;

(c) Educational Courses under clause (a) of sub-rule (2) of rule 12 of the Companies (Registered Valuers and Valuation) Rules, 2017; and

(d) Continuing education under clause

(e) of sub-rule (2) of rule 12 of the Companies (Registered Valuers and Valuation) Rules, 2017. These are collectively called ‘courses’ and individually as ‘course’.

To Read the detailed notification, please click on the link below:

NOTIFICATION


Insolvency and Bankruptcy Board of India

[Dt. 10-07-2020]

Legislation UpdatesRules & Regulations

The Insolvency and Bankruptcy Board of India makes the Insolvency and Bankruptcy Board of India (Insolvency Professionals) (Second Amendment) Regulations, 2020 to amend the Insolvency and Bankruptcy Board of India (Insolvency Professionals) Regulations, 2016.

In the Insolvency and Bankruptcy Board of India (Insolvency Professionals) Regulations, 2016, in regulation 12, in sub-regulation (1), for clause (a), the following clause shall be substituted, namely: —

“(a) its sole objective is to provide support services to insolvency professionals;”.

Notification


Insolvency and Bankruptcy Board of India

[Notification dt. 30-06-2020]

COVID 19Legislation UpdatesNotifications

Insolvency and Bankruptcy Board of India (Liquidation Process) (Second Amendment) Regulations, 2020

No. IBBI/2020-21/GN/REG060.- In exercise of the powers conferred by clause (t) of sub-section (1) of section 196 read with section 240 of the Insolvency and Bankruptcy Code, 2016 (31 of 2016), the Insolvency and Bankruptcy Board of India hereby makes the following regulations further to amend the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016, namely: –

1. (1) These Regulations may be called the Insolvency and Bankruptcy Board of India (Liquidation Process) (Second Amendment) Regulations, 2020.

(2) They shall come into force on the 17th April, 2020.

2. In the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016, after regulation 47, the following regulation shall be inserted, namely: –

“Exclusion of period of lockdown.

47A. Subject to the provisions of the Code, the period of lockdown imposed by the Central Government in the wake of COVID-19 outbreak shall not be counted for the purposes of computation of the time-line for any task that could not be completed due to such lockdown, in relation to any liquidation process.”


Insolvency and bankruptcy Code of India

[Notification dt. 17-04-2020]

Legislation UpdatesRules & Regulations

The Insolvency and Bankruptcy Board of India (IBBI) notified the Insolvency and Bankruptcy Board of India (Liquidation Process) (Amendment) Regulations, 2020 on 6-01-2020.

The amendment clarifies that a person, who is not eligible under the Code to submit a resolution plan for insolvency resolution of the corporate debtor, shall not be a party in any manner to a compromise or arrangement of the corporate debtor under section 230 of the Companies Act, 2013. It also clarifies that a secured creditor cannot sell or transfer an asset, which is subject to the security interest, to any person, who is not eligible under the Code to submit a resolution plan for insolvency resolution of the corporate debtor.

The amendment provides that a secured creditor, who proceeds to realise its security interest, shall contribute its share of the insolvency resolution process cost, liquidation process cost and workmen’s dues, within 90 days of the liquidation commencement date. It shall also pay an excess of realised value of the asset, which is subject to a security interest, over the amount of its claims admitted, within 180 days of the liquidation commencement date. Where the secured creditor fails to pay such amounts to the Liquidator within 90 days or 180 days, as the case may be, the asset shall become part of Liquidation Estate.

The amendment provides that a Liquidator shall deposit the number of unclaimed dividends if any, and undistributed proceeds, if any, in a liquidation process along with any income earned thereon into the Corporate Liquidation Account before he submits an application for dissolution of the corporate debtor. It also provides a process for a stakeholder to seek withdrawal from the Corporate Liquidation Account.

*Please refer to the detailed notification here: NOTIFICATION


Ministry of Corporate Affairs

Appointments & TransfersNews

S.O. 4479(E).—In exercise of the powers conferred by Section 189 of the Insolvency and Bankruptcy Code, 2016 (31 of 2016), the Central Government hereby appoints Shri Sudhaker Shukla, as Whole Time Member of the Insolvency and Bankruptcy Board of India with effect from 14-11-2019, i.e. date of assumption of the charge for the period of five years or upto his attainment of sixty-five years of age or until further orders, whichever is the earlier, on a consolidated salary of Rs. 4,00,000/- (rupees four lakhs ) per month.


Ministry of Corporate Affairs

[Notification dt. 13-12-2019]

NewsTreaties/Conventions/International Agreements

The Insolvency and Bankruptcy Board of India (IBBI) signed a Cooperation Agreement yesterday with the International Finance Corporation (IFC), a Member of the World Bank Group (WBG). The Agreement was signed by Mr. K. R. Saji Kumar, Executive Director, IBBI and Mr. Jun Zhang, Country Manager, IFC India, in the august presence of Mr. Injeti Srinivas, Secretary, Ministry of Corporate Affairs, Dr. M. S. Sahoo, Chairperson, IBBI, Mr. Gyaneshwar Kumar Singh, Joint Secretary, Ministry of Corporate Affairs, and other distinguished officers of the Ministry of Corporate Affairs and IBBI.

The Insolvency and Bankruptcy Code, 2016 (Code) provides for re-organisation and insolvency resolution of corporate persons, partnership firms and individuals in a time bound manner for maximization of the value of assets of such persons, to promote entrepreneurship, availability of credit and balance the interests of all the stakeholders and, for this purpose, has established an institutional infrastructure comprising of Adjudicating Authorities, the IBBI, insolvency professionals, insolvency professional agencies and information utilities. The IBBI exercises regulatory oversight over the Insolvency Professionals, Insolvency Professional Agencies and Information Utilities. It writes and enforces rules for processes, namely, corporate insolvency resolution, corporate liquidation, individual insolvency resolution and individual bankruptcy under the Code.

The IBBI is interested in the effective implementation of the Code and its Allied Rules and Regulations. The IFC is interested to assist the IBBI to further build the capacity of the Insolvency Professionals, and Insolvency Professional Agencies for the purposes of the Code. The Cooperation Agreement envisages technical assistance up to 30th June, 2021 by the IFC to IBBI in this regard.  It inter alia covers assistance in (a) Workshops and Training for Insolvency Professionals and Officers of the IBBI; (b) Train the Trainers for Workshops for Insolvency Professionals, (c) Development of National Insolvency Programme, (d) Insolvency and Valuation Examinations.

[Source: PIB]

Ministry of Corporate Affairs

Case BriefsTribunals/Commissions/Regulatory Bodies

National Company Law Appellate Tribunal (NCLAT): A two-member bench comprising of Justice S.J. Mukhopadhaya, Chairperson and Justice Bansi Lal Bhat, Member (Judicial), while dismissing an appeal filed under Section 61 of the Insolvency and Bankruptcy Code, 2016 held that Insolvency and Bankruptcy Board of India had no locus standi to file the appeal.

The appeal was filed by the IBBI against the order passed by National Company Law Tribunal, Mumbai contending that the interpretation of Section 29A  made therein by the Tribunal was not correct that resulted in selection of an ineligible Resolution Applicant and further approval of an ineligible resolution plan. The Appellate Tribunal noted that the IBBI is a regulatory body required to act in terms of Sections 196 and 240 I&B Code.

At the outset, the Appellate Tribunal observed, IBBI could not be held to be an aggrieved person under the Code. Further, it was held that the interpretation challenged as mentioned above may not be proper, but the IBBI had no locus standi to challenge the same. Referring to Section 30, the Board observed that it is the duty of the Resolution Professional to find out which resolution plans are in conformity with provisions of the Code. Further, in case of any wrong finding by the Adjudicating Authority (NCLT), it is the Resolution Professional, who represents the Corporate Debtor, to prefer an appeal under Section 61. While dismissing the appeal for the aforesaid reasons, liberty was given to IBBI to inform the Resolution Professional to move an appeal under Section 61. [Insolvency and Bankruptcy Board of India v. Wig Associates (P) Ltd., 2018 SCC OnLine NCLAT 386, order dated 01-08-2018]

 

Amendments to existing lawsLegislation Updates

The Insolvency and Bankruptcy Board of India (IBBI) has notified on 04-07-2018, the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) (Third Amendment) Regulations, 2018.

The following are salient amendments to the regulations:

a. The regulations provide that wherever the corporate debtor has classes of creditors having at least ten creditors in the class, the interim resolution professional shall offer a choice of three insolvency professionals in the public announcement to act as the authorised representative of creditors in each class. A creditor in a class may indicate its choice of an insolvency professional, from amongst the three choices provided by the interim resolution professional, to act as its authorised representative. The insolvency professional, who is the choice of the highest number of creditors in the class, shall be appointed as the authorised representative of the creditors of the respective class.

b. An application for withdrawal of an application admitted under Section 7, 9 or 10 of the Code (for closure of corporate insolvency resolution process) may be submitted to the interim resolution professional or the resolution professional, as the case may be, before issue of invitation for expression of interest, along with a bank guarantee towards estimated cost incurred for certain purposes under the process. The committee of creditors (CoC) shall consider the application within seven days of its constitution or seven days of receipt of the application, whichever is later. If the application is approved by the CoC with 90% voting share, the resolution professional shall submit the application to the Adjudicating Authority on behalf of the applicant, within three days of such approval.

c. Where rate of interest has not been agreed to between the parties in case of creditors in a class, the voting share of such a creditor shall be in proportion to the financial debt that includes an interest at the rate of eight per cent p.a.

d. Where the appointment of resolution professional is delayed, the interim resolution professional shall perform the functions of the resolution professional from the fortieth day of the insolvency commencement date till a resolution professional is appointed.

e. A meeting of the CoC shall be called by giving not less than five days’ notice in writing to every participant. The CoC may, however, reduce the notice period from five days to such other period of not less than forty-eight hours where there is any authorised representative and to twenty-four hours in all other cases. The authorised representative shall circulate the agenda to creditors in a class and announce the voting window at least twenty-four hours before the window opens for voting instructions and keep the voting window open for at least twelve hours.

f. The resolution professional shall form an opinion whether the corporate debtor has been subjected to certain transactions (preferential transactions, undervalued transactions, extortionate transactions or fraudulent transactions) by 75th day and make a determination of the same by 115th day of the insolvency commencement date.  Where the resolution profesional makes such a determination,  he shall apply to the Adjudicating Authority for appropriate relief before 135th day of the insolvency commencement date.

g. The resolution professional shall publish an invitation for expression of interest (EoI) by the 75th day from the insolvency commencement date. The invitation shall specify the criteria, ineligibility, the last date for submission of EoI and other details and shall not require payment of non-refundable deposit. Any EoI received after the specified time shall be rejected. The resolution professional shall conduct due diligence based on material on record and issue a provisional list of prospective resolution applicants within 10 days of the last date of submission of EoI. On considering objections to the provisional list, the resolution professional shall issue the final list of prospective resolution applicants, within 10 days of the last date for receipt of objections.

h. The resolution professional shall issue the information memorandum, the evaluation matrix and the request for resolution plans (RFRP), within 5 days of issue of the provisional list to the prospective resolution applicants and allow at least 30 days for submission of resolution plans. The RFRP shall detail each step in the process, and the manner and purposes of interaction between the resolution professional and the prospective resolution applicant, along with corresponding timelines. The resolution plan needs to demonstrate that (a) it addresses the cause of default; (b) it is feasible and viable; (c) it has provisions for its effective implementation; (d) it has provisions for approvals required and the timeline for the same; and (e) the resolution applicant has the capability to implement the resolution plan. The CoC shall evaluate the resolution plan strictly as per the evaluation matrix to identify the best resolution plan and may approve it with the required majority. If approved by the CoC, the resolution professional shall endeavour to submit the resolution plan approved by the CoC to the Adjudicating Authority at least fifteen days before the maximum period for completion of corporate insolvency resolution process, along with a compliance certificate in the specified Form.

The regulations provide for a model timeline of the corporate insolvency resolution process assuming that the interim resolution professional is appointed on the date of commencement of the process and the time available is 180 days, as under:

Section / Regulation Description of Activity Norm Timeline
Section 16(1) Commencement of CIRP and appointment of IRP …. T
Regulation 6(1) Public announcement inviting claims Within 3 Days of Appointment of IRP T+3
Section 15(1)(c) / Regulations 6(2)(c) and 12 (1) Submission of claims For 14 Days from Appointment of IRP T+14
Regulation 12(2) Submission of claims Up to 90th day of commencement T+90
Regulation 13(1) Verification of claims received under regulation 12(1) Within 7 days from the receipt of the claim T+21
Regulation 13(2) Verification of claims received under regulation 12(2) T+97
Section 21(6A) (b) / Regulation 16A Application for appointment of AR Within 2 days from verification of claims received under regulation 12(1) T+23
Regulation 17(1) Report certifying constitution of CoC T+23
Section 22(1) / Regulation 19(1) 1st meeting of the CoC

 

Within 7 days of the constitution of the CoC, but with seven days’ notice T+30
Section 22(2) Resolution to appoint RP by the CoC In the first meeting of the CoC T+30
Section 16(5) Appointment of RP On approval by the AA ……
Regulation 17(3) IRP performs the functions of RP till the RP is appointed. If RP is not appointed by 40th day of commencement T+40
Regulation 27 Appointment of valuer Within 7 days of appointment of RP, but not later than 40th day of commencement    T+47
Section 12(A) / Regulation 30A Submission of application for withdrawal of application admitted Before issue of EoI W
CoC to dispose of the application Within 7 days of its receipt or 7 days of constitution of CoC, whichever is later. W+7
Filing application of withdrawal, if approved by CoC with 90% majority voting, by RP to AA Within 3 days of approval by CoC W+10
Regulation 35A RP to form an opinion on preferential and other transactions Within 75 days of the commencement T+75
RP to make a determination on preferential and other transactions Within 115 days of commencement T+115
RP to file applications to AA for appropriate relief Within 135 days of commencement T+135
Regulation 36 (1) Submission of IM to CoC Within 2 weeks of appointment of RP, but not later than 54th day of commencement T+54
Regulation 36A Publish Form G Within 75 days of commencement T+75
Invitation of EoI
Submission of EoI At least 15 days from issue of EoI (Assume 15 days)   T+90
Provisional List of RAs by RP Within 10 days from the last day of receipt of EoI T+100
Submission of objections to provisional list For 5 days from the date of provisional list T+105
Final List of RAs by RP Within 10 days of the receipt of objections T+115
Regulation 36B Issue of RFRP, including Evaluation Matrix and IM Within 5 days of the issue of the provisional list T+105
Receipt of Resolution Plans At least 30 days from issue of RFRP (Assume 30 days) T+135
Regulation 39(4) Submission of CoC approved Resolution Plan to AA As soon as approved by the CoC T+165
Section 31(1) Approval of resolution plan by AA T=180

Note: AAAdjudicating Authority; ARAuthorised Representative; CIRPCorporate Insolvency Resolution Process; CoCCommittee of Creditors; EoIExpression of Interest; IMInformation Memorandum; IRPInterim Resolution Professional; RAResolution Applicant; RPResolution Professional; RFRPRequest for Resolution Plan.

Ministry of Corporate Affairs

Amendments to existing lawsLegislation Updates

The Insolvency and Bankruptcy Board of India (IBBI) has amended the Insolvency and Bankruptcy Board of India (Fast Track Insolvency Resolution Process for Corporate Persons) Regulations, 2017. According to the Amendments,

1. The Resolution Professional shall appoint Registered Valuers to determine the fair value and the liquidation value of the Corporate Debtor. After the receipt of Resolution Plans, the Resolution Professional shall provide the fair value and the liquidation value to each member of the Committee of Creditors in electronic form, on receiving a confidentiality undertaking. The Resolution Professional and Registered Valuers shall maintain confidentiality of the fair value and the liquidation value.

2. The Resolution Professional shall submit the information memorandum in electronic form to each member of the Committee of Creditors within two weeks of his appointment as resolution professional and to each prospective resolution applicant latest by the date of invitation of resolution plan, on receiving confidentiality undertaking.

3. The Resolution Professional shall issue an invitation, including the evaluation matrix, to the prospective Resolution Applicants. He may modify the invitation as well as the evaluation matrix. However, the prospective resolution applicant shall get at least 15 days from the issue of invitation or modification thereof, whichever is later, to submit resolution plans. Similarly, he will get at least 8 days from the issue of evaluation matrix or modification thereof, whichever is later, to submit resolution plans. An abridged invitation shall be available on the web site, if any, of the corporate debtor, and on the web site, if any, designated by the IBBI for the purpose.

4. While the Resolution Applicant shall continue to specify the sources of funds that will be used to pay insolvency resolution process costs, liquidation value due to Operational Creditors and liquidation value due to dissenting financial creditors, the Committee of Creditors shall specify the amounts payable from resources under the Resolution Plan for these purposes.

5. A Resolution Plan shall provide for the measures, as may be necessary, for insolvency resolution of the Corporate Debtor for maximization of value of its assets. These may include reduction in the amount payable to the creditors, extension of a maturity date or a change in interest rate or other terms of a debt due from the Corporate Debtor, change in portfolio of goods or services produced or rendered by the Corporate Debtor, and change in technology used by the Corporate Debtor.

6. The Resolution Professional shall submit the Resolution Plan approved by the Committee of Creditors to the Adjudicating Authority, at least 15 days before the expiry of the maximum period permitted for the completion of the fast track Corporate Insolvency Resolution Process.

The Amendments have come into force since yesterday after their publication in the Gazette of India. The Amendments are available at www.mca.gov.in and www.ibbi.gov.in.

Hot Off The PressNews

The Insolvency and Bankruptcy Board of India (IBBI) has constituted Technical Committee to lay down Technical Standards for the performance of core services and other services under IBBI (Information Utilities) Regulations, 2017, in accordance with Regulation 14 of the IBBI (Information Utilities) Regulations, 2017. The Technical Committee (Committee) shall consist of the following:

Sl. No. Name and Position Position in Committee
1 Dr. R. B. Barman (Chairman, National Statistical Commission) Chairperson
2 Dr. Nand Lal Sarda (Emeritus Fellow, Indian Institute of Technology, Bombay) Member
3 Dr.  Pulak Ghosh (Professor, Indian Institute of Management, Bangalore) Member
4 Sh. V. G. Kannan (Chief Executive, Indian Banks Association) Member

The Committee shall give its recommendation for laying down Technical Standards for the performance of core services and other services under Insolvency and Bankruptcy Board of India (Information Utilities) Regulations, 2017 and specifically on the following matters, namely:

(a) the Application Programming Interface;

(b) standard terms of service;

(c) registration of users;

(d) unique identifier for each record and each user;

(e) submission of information;

(f) identification and verification of persons;

(g) authentication of information;

(h) verification of information;

(i) data integrity;

(j) consent framework for providing access to information to third parties;

(k) security of the system;

(l) security of information;

(m) risk management framework;

(n) porting of information;

(o) exchange or transfer of information between information utilities;

(p) inter-operability among information utilities;

(q) preservation of information; and

(r) purging of information.

Ministry of Corporate Affairs