Legislative Update -
Amendments introduced to corporate insolvency resolution process regulations by the Insolvency and Bankruptcy Board of India.
The Insolvency and Bankruptcy Board of India ("IBBI") has announced amendments to the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 ("CIRP Regulations"). This announcement was made public on September 18, 2023. The changes take effect on September 18, 2023.
Key Points –
Personnel of the Corporate Debtor ("CD") are required to assist in facilitating the smooth operation of the Corporate Insolvency Resolution Process ("CIRP") by providing a comprehensive protocol for the Resolution Professional's (RP) gaining custody and control of the CD's assets and documents.
The Amendment Regulations extend the deadlines for filing claims up to the date of issuance of the request for resolution plans under regulation 36B or ninety days from the insolvency commencement date, whichever is later, to assist the Adjudicating Authority ("AA") burdened with applications for acceptance of delayed claims. Additionally, it gives the RP the authority to express his opinion regarding the acceptance of a claim for its collation even for claims submitted after this deadline, as well as to recommend their acceptance to the committee of creditors (CoC) for inclusion in the list of claims and treatment in the resolution plan, before the claim is decided or approved by the AA.
The modifications expand the function and obligations of the Authorised Representative ("AR") in order to assist the class of creditors, particularly property purchasers. A few of the important tasks of the AR include (i) checking the accuracy and completeness of the minutes prepared by the RP, (ii) helping creditors evaluate the resolution plan, (iii) regularly updating creditors in a class on the status of the CIRP, (iv) helping to modify the resolution plan on behalf of the class of creditors he represents, etc. Along with the expanded duty, the AR's fees have also been raised. Additionally, a replacement process for AR has been established.
The modification calls for the minutes of the committee of creditors that approved the resolution plan to be included in the compliance certificate (Form H), giving the AA a greater understanding of the reasoning behind the CoC's choice.
In the case of an application filed under Section 7 or Section 9 of the IBC, the specifics of the chronology of the debt, default, and limitation must be presented along with the supporting documentation to make the AA's decision-making process easier.
The amendment makes revisions to Form G to give potential resolution applicants more information with less work on their side, enhancing the value obtained in the resolution plan.
The RP must be given all relevant information in the event that a creditor assigns a debt to another person. The amended clause now stipulates a seven-day window for submitting these facts to allow for a smooth CoC meeting.
The amendment allows committee members to request a CD audit be done and includes the cost of such an audit as part of CIRP costs in order to increase the transparency and sturdiness of the resolution process.
The amendment harmonises the deadlines for a number of procedural steps, including the distribution of information memos and requests for resolution plans.