IBBI amends CIRP, liquidation process and information utilities regulations
November 17, 2020
The IBBI has notified amendments to the Insolvency Resolution Process for Corporate Persons Regulations, 2016; the Liquidation Process Regulations, 2016, and the Information Utilities Regulations, 2017. All the amendment Regulations come into effect from 13 November 2020, as under:
A new Regulation 2A is inserted to specify two additional documents for the purpose of ‘other record or evidence of default’, that the Financial Creditor is required to furnish for filing an application under section 7 of the IB Code. These are (a) certified copy of entries in the relevant account in the bankers’ book, and (b) order of a court or tribunal that has adjudicated upon the non-payment of a debt.
A new clause (ca) is inserted in Regulation 13(2) to require the IRP/RP to submit the list of creditors on an electronic platform of the IBBI for dissemination on the IBBI’s website, so as to improve transparency and enable stakeholders to ascertain the details of their claims at a central place. This is in addition to filing of the list of creditors with the Adjudicating Authority and displaying it on the website of the corporate debtor.
In the interest of transparency, a new sub-regulation 5A is inserted to Regulation 39 (Approval of Resolution Plan) to require the RP to intimate each claimant under a resolution plan the principle or formulae for payment of debts under the plan, within 15 days of the order of the AA approving such resolution plan. This requirement will apply to every ongoing CIRP and CIRPs commencing on or after the date of coming into force of this amendment.
To facilitate quick closure of the liquidation process, a new Regulation 37A (Assignment of not readily realisable assets) enables the liquidator to assign or transfer a ‘not readily realisable asset’ to any person, in consultation with the stakeholders’ consultation committee. For this purpose, “not readily realisable asset” means any asset included in the liquidation estate which could not be sold through available options and includes contingent or disputed assets, and assets underlying proceedings for preferential, undervalued, extortionate credit and fraudulent transactions. A liquidator shall attempt to sell such assets at the first instance, failing which he may assign or transfer such an asset to any person, in consultation with the stakeholders’ consultation committee, failing which he may distribute the undisposed of assets amongst stakeholders, with the approval of the AA.
A new Regulation 30A enables a creditor to assign or transfer the debt due to it to any other person. This is aimed at facilitating a creditor who may not be willing to wait for completion of liquidation process for realisation of his debt.
IBBI (Information Utilities) (Amendment) Regulations, 2020 : The I&B Code defines financial information to mean certain records and ‘such other information as may be specified’. A new clause (da) is inserted in Regulation 2(1) to specify that a “public announcement” made under the Code is financial information. Accordingly, a new Regulation 21A mandates Information Utilities to disseminate the public announcement to its registered users, who are creditors of the CD undergoing insolvency proceeding. This is in addition to publishing the public announcement in the newspapers and websites as required in the Regulations.
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