Liquidator Fees to be paid CIRP Regulations

Liquidator Fees to be paid Regulation 39(D) of CIRP Regulations

What is liquidator Fees to be paid CIRP Regulations? 

Fees of the Liquidator

While approving a resolution plan under section 30 or deciding to liquidate the corporate debtor under section 33, the committee may, in consultation with the resolution professional, fix the fee payable to the liquidator, if an order for liquidation is passed under section 33 –

• For the period, if any, used for compromise or arrangement under section 230 of the Companies Act, 2013;
• For-the period, if any, used for sale under clauses (e) and (f) of Regulation 32 of the IBBI Liquidation Process Regulations, 2016;(Sale  as Going Concern) and
• For the balance period of liquidation.

Liquidator Fee :- Regulation 4 of Liquidation Regulations

• The fee payable to the liquidator shall form part of the liquidation cost (EARLIER)
• Provided that the cost, if any, incurred by the liquidator in relation to compromise or arrangement under section 230 of the Companies Act, 2013 (18 of 2013), if any, shall not form part of liquidation cost
• Fee payable to the liquidator shall be in accordance with the decision taken by the committee of creditors under Regulation 39D of the IBBI CIRP Regulations, 2016
• In cases other than those covered under sub-regulation (1), the liquidator shall be entitled to a fee –
  • At the same rate as the RP was entitled to during the corporate insolvency resolution process, for the period of compromise or arrangement under section 230 of the Companies Act, 2013 (18 of 2013); and
  • as a percentage of the amount realised net of other liquidation costs, and of the amount distributed, for the balance period of liquidation, as under

Liquidator’s Fees as per the Regulations (if not decided by COC)

Amount of Realisation /Distribution (In INR)	Percentage of fee on the amount realised / distributed
	in the first six  months	in the next six months	Thereafter
Amount of Realisation (exclusive of liquidation costs)
On the first 1 crore	5.00	3.75	1.88
On-the next 9 crore	3.75	2.80	1.41
On the next 40 crore	2.50	1.88	0.94
On-the next 50 crore	1.25	0.94	0.51
On further sums realized	0.25	0.19	0.10
Amount Distributed to Stakeholders
On the first 1 crore	2.50	1.88	0.94
On-the next 9 crore	1.88	1.40	0.71
On the next 40 crore	1.25	0.94	0.47
On-the next 50 crore	0.63	0.48	0.25
On further sums distributed	0.13	0.10	0.05

• Where the fee is payable under regulation (2)(b), the liquidator shall be entitled to receive half of the fee payable on realisation only after such realised amount is distributed.
• For the purposes of clause (b), it is hereby clarified 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. 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.
• Regulation 4 of these regulations, as it stood before the commencement of the Insolvency and Bankruptcy Board of India (Liquidation Process) (Amendment) Regulations, 2019 shall continue to be applicable in relation to the liquidation processes already commenced before the coming into force of the said amendment Regulations.

Meaning of Liquidation Costs

Liquidation cost U/s 5 (16) & Regulation 2(ea) means-

• Fee Payable To The Liquidator Under Regulation 4;
• Remuneration Payable By The Liquidator Under Regulation 7 (1)- PROFESSIONALS;
• Costs Incurred By The Liquidator Under Regulation 24(2)- Verification And Determination Of Claim;

Costs Incurred By The Liquidator For Preserving & Protecting the Assets, Properties, Effects & Actionable Claims, Including Secured Assets of The Corporate Debtor;

• Costs Incurred By The Liquidator in carrying on the business of the corporate debtor as a going concern;
• Interest On Interim Finance For a period Of 12 Months Or For The Period From The Liquidation Commencement Date Till Repayment Of Interim Finance, Whichever Is Lower;
• The Amount Repayable To Contributories Under Sub-regulation (3) Of Regulation 2A;
• Any Other Cost incurred by the liquidator which is essential for completing the liquidation process:

Provided that the cost, if any, incurred by the liquidator in relation to compromise or arrangement under section 230 of the Companies Act, 2013 (18 of 2013), if any, shall not form part of liquidation cost.

Fee Payment structure of IBBI fees payable to the IBBI / Board

How to meeting Liquidation Costs as per CIRP Regulations ?

Meeting Liquidation Costs Regulation 39(B) of CIRP Regulations

• While approving a resolution plan under Section 30(4) or deciding to liquidate the corporate debtor under Section 33 (2), the committee may make a best estimate of the amount required to meet liquidation costs, in consultation with the resolution professional, in the event an order for liquidation is passed under  section 33.

• The committee shall make a best estimate of the value of the liquid assets available to meet the liquidation costs, as estimated in sub-regulation (1).
• Where the estimated value of the liquid assets is less than the estimated liquidation costs, the committee shall approve a plan providing for contribution for meeting the difference between the two.
• The resolution professional shall submit the plan approved under sub- regulation (3) to the Adjudicating Authority while filing the approval or decision of the committee under section 30 or 33, as the case may be.

Contribution to Liquidation Costs – Regulation 2 (A)

• Where the committee of creditors did not approve a plan under regulation 39B(3) of the  Insolvency and Bankruptcy Board of India (Insolvency  Resolution Process for Corporate Persons) Regulations,  2016,
• The liquidator shall call upon the financial  creditors, being financial institutions, to contribute the  excess of the liquidation costs over the liquid assets of  the corporate debtor, as estimated by him, in  proportion to the financial debts owed to them by the  corporate debtor.
• Eg. Assume that the excess of liquidation costs over liquid assets is Rs.10, as estimated by the liquidator. Financial creditors will be called upon to contribute, as under:

Sl. No.	Financial creditors	Amount of debt due to financial creditors (Rs.)	Amount to be contributed towards liquidation cost (Rs.)
(1)	(2)	(3)	(4)
1	Financial institution A	40	04
2	Financial institution B	60	06
3	Non-financial institution A	50	00
4	Non financial institution B	50	00
Total		200	10

• Contributions made under the plan approved under Regulation 39B (3) of  the CIRP Regulations, 2016 or contributions made under sub-regulation (1), as  the case may be, shall be deposited in a designated escrow account to be  opened and maintained in a scheduled bank, within seven days of the passing  of the liquidation order
• The amount contributed under regulation 39B (2) shall be repayable with  interest at bank rate referred to in section 49 of the Reserve Bank of India Act,  1934 (2 of 1934) as part of liquidation cost.

Popular blog:-

• Liquidation Process for CD under IBC
• Initiation of Liquidation under the IBC Code
• Sale as Going concern under liquidation
• Liquidator fees to be paid CIRP Regulations
  
• IBC Forms Insolvency and Bankruptcy Code 2016 Forms Demand Notices Returns

Services in the field of Insolvency Laws

• Services as ‘Insolvency Professionals’
• Team of Experts to act as an ‘Insolvency Professional’.
• Equipped with the required infrastructure to take control of Corporate Debtor and to make a meaningful concern in the long run.
• Cash flow monitoring and coordinating with banks
• Drafting & vetting of Expression of Interest, Information Memorandum and Evaluation Matrix
• Expert team for filing and Verification of claims
• Drafting and Filing reports with the Adjudicating Authority (NCLT)
• Filing of replies and applications with the Adjudicating Authority as and when the situation demands.
• Equipped with necessary Infrastructure to Liquidate the Corporate Debtors-
• Assist in Valuation & Forensic audit/Transaction audit, Assist in Sale of the corporate debtor as going concerned