IBBI Regulations Amendments – 30 September 2021

  October 1, 2021

IBC Updates

The Insolvency and Bankruptcy Board of India (IBBI) has notified the IBBI (Insolvency Resolution Process for Corporate Persons) (Third Amendment) Regulations, 2021. Highlights of the amendment are:

  1. The committee of creditors (CoC) (collectively and individually) shall discharge its functions in compliance with the guidelines as may be issued by the IBBI (Regulation 17(1A)).
  2. Modifications in the following permitted, but not more than once:
    1. Invitation for expression of interest (Regulation 36A (4A)),
    2. Request for resolution plan (RFRP) (Proviso, Regulation 36B(5)),
    3. Evaluation Matrix (Proviso, Regulation 36B(5)), and
    4. Resolution Plan (if envisaged in the RFRP) (Regulation 39(1A)(a) substituted).
  3. The resolution professional may use a challenge mechanism to allow resolution applicants to improve their resolution plans (Regulation 39(1A)(b) substituted).
  4. The COC shall not consider the resolution plans
    1. received beyond the time specified by it under Regulation 36B, or
    2. received from someone outside the final prospective applicants’ list, or
    3. is not in accordance with Section30(2) and Regulation 39(1).

 

The IBBI has also notified the IBBI (Liquidation Process) (Second Amendment) Regulations, 2021. Key highlights of the amendment are:

  1. The scope of advise the stakeholders consultation committee (SCC) elaborated:
    1. SCC to advise the liquidator on (a) appointment of professionals and their remuneration, (b) sale under regulation 32, including manner of sale, pre-bid qualifications, reserve price, earnest money, marketing strategy, etc.
    2. Liquidator shall place before the SCC’s first meeting, his decisions made prior to the SCC’s constitution. (Regulation 31A(1) substituted).
  2. Nomination to the SCC: If any class of stakeholders does not nominate its representative to the SCC, such representative to be selected by a majority vote of present and voting stakeholders of that class (earlier, the stakeholder in that class with the highest claim would be selected) (Regulation 31A(4) substituted).
  3. Reasons for not following SCC’s advise to be mentioned in the next progress report (proviso, Regulation 31A(10)).
  4. No requirement of non-refundable deposit for participation in an auction. Earnest money deposit amount to not exceed 10% of the reserve price ((Schedule I, paragraph 1(3)).
  5. Liquidator to provide reasons to the highest bidder, if the liquidator rejects his bid. Reasons to be also mentioned in the next progress report (Schedule I, paragraph 1(11A)).
  6. In the definition of ‘liquidation cost’, ‘the amount repayable to contributories under sub-regulation (3) of regulation 2A’, replaced by ‘the amount repayable under sub-regulation (3) of regulation 2A’ (Regulation 2(1)(ea)(vii)).
  7. To improve visibility for the liquidation assets, the IBBI has made an electronic platform for hosting pubic notices of auctions of liquidation assets of ongoing liquidations (IBBI Press Release).

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