Amends in IBC Regulations to decrease delays in Liquidation

Amends in IBC Regulations to decrease delays in insolvency & Liquidation process.

• Objective to decrease delays & realise better value, IBBI has notified the IBBI (Liquidation Process) (2nd Amendment) Regulations 2022, IBBI (Voluntary Liquidation Process) (2nd Amendment) Regulations 2022 (Amendment Voluntary Liquidation Regulations) & (Amendment Liquidation Regulations),.
• Above notification issue on Sept. 16 2022, Insolvency and Bankruptcy Board of India  official sources said.

• The Voluntary Liquidation Regulations) & Amendment Liquidation Regulations amendments would ensure better participation of stakeholders & streamline the liquidation process to decrease delays in the IBC process,
• Post Amendment, the Committee of Creditors constituted during the CIRP would function as Stakeholders Consultation Committee during the first Sixty days.
• After adjudication of claims & within Sixty days of initiation of process, the Stakeholders Consultation Committee shall be reconstituted based upon the admitted claims.
• Also, as per the Amendments, the liquidator has been Compulsory to initiate meetings of Stakeholders Consultation Committee in a structured & timeline manner with better activation of stakeholders.

Recent Amendment in Liquidation Regulations

• Amendment Liquidation Regulations and Amendment Voluntary Liquidation Regulations will be in effect Beginning on September 16, 2022, Both www.ibbi.gov.in & www.mca.gov.in have these.
• Scope of compulsory consultation by the liquidator with Stakeholders Consultation Committee has been increase.
• Now, Stakeholders Consultation Committee may even propose change of Insolvency professional as liquidator to the NCLT or NCLAT & fix fees of the Insolvency professional as liquidator, in case the Committee of Creditors has not fix it during the Corporate Insolvency Resolution Process.
• In case any claim is not filed during the liquidation process under the IBC Code, claim amount collated during Corporate Insolvency Resolution Process shall be verified by the Insolvency professional appointed as liquidator.
• Wherever the Committee of Creditors decides that process of arrangement or compromise may be explored during the IBC liquidation process,
• Insolvency professional appointed as liquidator shall file application only in such cases before the AA, for considering the proposal of arrangement or compromise plan, if any, within thirty days of the order of liquidation under the IBC.
• The auction process has been given specific event-based timeframes. Furthermore,
• Stakeholders Consultation Committee must notify the liquidator of the manner in which proceedings regarding avoidance transactions, or wrongful trading or fraudulent shall be pursued after the liquidation proceedings are concluded before filing an application for dissolution or closure of the process.