The IBBI has amended the Liquidation Process Regulations 2016, with effect from 6 January 2020. The key amendments, amongst others, relate to the operation and maintenance of a Corporate Liquidation Account, the timelines for payment by the secured creditor who realizes its assets to the liquidator, bar on the transfer of assets subject to security interest to any person who is not eligible to submit a resolution plan for the insolvency of the corporate debtor, under the IB Code and a bar on any such ineligible person to be a party to any compromise or arrangement u/s 230 of the Companies Act 2013 .
A secured creditor who proceeds to realise its security, shall pay to the liquidator amounts payable under Section 53(1)(a) and (b)(i) of the Code, within 90 days from the liquidation commencement date. The excess of the realised value of the asset shall be paid within 180 days of the liquidation commencement date. In case of failure to do so, the asset which is subject to security interest shall become part of the liquidation estate. Where the payable amount is not certain by the date the amount is payable, the secured creditor will pay the amount as estimated by the liquidator and make good the difference as soon as it is ascertained.
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 such compromise or arrangement.
A secured creditor shall not sell or transfer an asset which is subject to security interest to any person who is not eligible under the Code to submit a resolution plan for insolvency resolution of the corporate debtor.
To refer to the IBBI (Liquidation Process) (Amendment) Regulations 2020, dated 6 January 2020, click here.
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