Insolvency Resolution Process and Liquidation Process for Corporate Persons Amended
- IBBI (Insolvency Resolution Process for Corporate Persons) (Amendment) Regulations, 2018, dated February 06, 2018 and IBBI (Fast Track Insolvency Resolution Process for Corporate Persons) (Amendment) Regulations, 2018 dated February 07, 2018 (collectively referred to as the “Amendment Regulations”)
The IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016, and IBBI (Fast Track Insolvency Resolution Process for Corporate Persons) Regulations, 2017 (“Principal Regulations”) have been amended as follows:
- The definition of “evaluation matrix” has been added to the Principal Regulations. Evaluation Matrix means such parameters to be applied and the manner of applying such parameters, as approved by the committee, for consideration of resolution plans for its approval. Further, as per the Amendment Regulations, a Resolution Professional is required to issue an invitation including an evaluation matrix to the prospective applicants to submit resolutions plans.
- The definition of “liquidation value” has been amended to mean the estimated realizable value of the assets of the corporate debtor, if the corporate debtor were to be liquidated on the insolvency commencement date.
- The provision regarding determination of liquidation value by a registered valuer has now been substituted by determination of “fair value and liquidation value” which shall be computed in accordance with internationally accepted valuation standards, after physical verification of the inventory and fixed assets of the corporate debtor.
- The ambit of matters covered under the Resolution Plan has been made more inclusive. The Resolution Plan, after the amendment, shall also contain the proposal for changes in portfolio of goods or services produced or rendered by the corporate debtor as well as the proposal for changes in technology used by the corporate debtor.
- The Resolution Professional is now required to submit the resolution plan approved by the committee to the Adjudicating Authority, at least 15 (Fifteen) days before the expiry of the maximum period permitted for the completion of the corporate insolvency resolution process or fast track corporate insolvency resolution process, as the case may be.
- IBBI (Insolvency Resolution Process for Corporate Persons) (Second Amendment) Regulations, 2018
The second amendment to the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 brought the following changes:
- A person who is not an employee or partner or proprietor of a firm of auditors or secretarial auditors shall be considered independent of the corporate debtor and shall therefore be considered eligible for appointment as a resolution professional.
- After the amendment, it is the duty of the interim resolution professional or the resolution professional, as the case may be, to disclose item wise insolvency resolution process costs in such manner as may be required by the Insolvency and Bankruptcy Board of India (“IBBI”).
- The amendment has added a compulsion on the resolution professional to identify the prospective resolution applicants on or before the 105th (One Hundred and Fifth) day from the insolvency commencement date.
- IBBI (Liquidation Process) (Amendment) Regulations, 2018
The regulations relating to liquidation process have been amended to bring the following changes:
- The definition of “liquidation cost” has been added which includes the fees paid to the liquidator, remuneration paid by the liquidator, cost incurred by the liquidator for verification and determination of claims, and interest on interim finance for a period of 12 (Twelve) months or for the period from the liquidation commencement date till repayment of interim finance, whichever is lower.
- A person who is not an employee or partner or proprietor of a firm of auditors or secretarial auditors shall be considered independent of the corporate debtor and shall therefore be considered eligible for appointment as a liquidator.
- Amongst other powers conferred on the liquidator, pursuant to the amendment, the liquidator can sell the corporate debtor as a going concern.