CAIRR Update February 05, 2024

05/02/2024

Summary of the IBBI Notifications dated 31/01/2024.

These notifications are integrated in our free-to-use website ca2013.com.

Insolvency and Bankruptcy Board of India (“IBBI”) notifies the Insolvency and Bankruptcy Board of India (Voluntary Liquidation Process) (Amendment) Regulations (“Regulations”), 2024

The key highlights of the amendment regulations are as follows:

1. As per Regulation 3 of the said regulations, for the purpose of initiation of liquidation proceedings of a corporate person, a declaration from majority of Designated Partners (In case of LLP) or Individuals constituting the governing body (In case of other corporate persons) is to be obtained which shall be verified by an affidavit. The contents of this affidavit have been modified to include that the corporate person has made sufficient provision to meet the obligations arising on account of pending matters mentioned in clause (b) sub-clause (iii).
2. The corporate persons are now required to provide a disclosure about pending proceedings or assessments before statutory authorities, and pending litigations, in respect of the corporate person.
3. The requirement to hold a contributories meeting has been mandated if the liquidation process continues for more than 270 days (In case special resolution has been passed for voluntary liquidation of the corporate person or ordinary resolution is passed for voluntary liquidation of corporate person in case of expiry of its period as fixed in the Articles of Association or occurrence of event upon which the Company is to be dissolved as per its Articles of Association) or 90 days (In the other cases) as against the earlier requirement of holding a contributories meeting in case the process exceeds twelve months.
4. The contributories meeting shall be held within 15 days of the end of the 270 days or 90 days as the case maybe and at the end of every succeeding 270 days or 90 days as the case maybe.
5. The Status Report to be submitted in case the liquidation process exceeds the duration specified is to be for the said period and it shall no longer be called the Annual Status Report.
6. The content of the Status Report to now include ‘the reasons for not completing the process within stipulated time period and the additional time required for completing the process.’
7. The liquidator is required to file the Status Report with the IBBI within 7 days of the meeting of the contributories.
8. The process for claiming the amount deposited into the Corporate Voluntary Liquidation Account has been revised and the same is provided for in the circular.

Click here to view the IBBI Notification on Insolvency and Bankruptcy Board of India (Voluntary Liquidation Process) (Amendment) Regulations, 2024.

Insolvency and Bankruptcy Board of India (“IBBI”) notifies the Insolvency and Bankruptcy Board of India (Bankruptcy Process for Personal Guarantors to Corporate Debtors) (Amendment) Regulations, 2024 (“Regulations”)

As per Regulation 3 of the Insolvency and Bankruptcy Board of India (Bankruptcy Process for Personal Guarantors to Corporate Debtors) Regulations, 2019, an Insolvency Professional shall be eligible to be appointed as a Bankruptcy Trustee if the Insolvency Professional Entity of which he is a partner or director or any other partner or director of such Insolvency Professional Entity does not represent any party in the bankruptcy process. 

Further, the regulations permit the Bankruptcy Trustee to appoint accountants, registered valuers, advocates, or other professionals, as may be necessary, to assist him in the discharge of his duties, obligations and functions for a reasonable remuneration. An insolvency professional who has acted or is acting as an interim resolution professional, a resolution professional or a liquidator in respect of the corporate debtor could not be appointed for the same. 

However, the above-mentioned requirements have been omitted vide the amendment regulations.

Click here to view the IBBI Notification on Insolvency and Bankruptcy Board of India (Bankruptcy Process for Personal Guarantors to Corporate Debtors) (Amendment) Regulations, 2024.

Insolvency and Bankruptcy Board of India (“IBBI”) notifies the IBBI (Insolvency Resolution Process for Personal Guarantors to Corporate Debtors) (Amendment) Regulations, 2024 (“Regulations”)

An insolvency professional shall be eligible to be appointed as a resolution professional for a resolution process, if-he, the insolvency professional entity of which he is a partner or a director, and all the partners and directors of the said insolvency professional entity are independent of the guarantor. One of the criteria for considering the person as independent of the guarantor is that he has not acted or is not acting as interim resolution professional, resolution professional or liquidator in respect of the corporate debtor. 

However, the said requirement has been omitted vide the amendment regulations. 

Further, Regulation 17A has been introduced which requires the Resolution Professional to place the repayment plan in the meeting of creditors for its consideration. If no repayment plan has been received, the same is to be notified in the meeting of creditors.

Click here to view the IBBI Notification on IBBI (Insolvency Resolution Process for Personal Guarantors to Corporate Debtors) (Amendment) Regulations, 2024.

Insolvency and Bankruptcy Board of India (“IBBI”) notifies the Insolvency and Bankruptcy Board of India (Model Bye-Laws and Governing Board of Insolvency Professional Agencies) (Amendment) Regulations, 2024 (“Regulations”)

The authorization for assignment issued or renewed by the Insolvency Professional Agency shall be valid for a period of one year from the date of its issuance or renewal as against the earlier provision of one year from the date of its issuance or renewal or till the date the professional member attains the age of seventy years, whichever is earlier. 

In case the expiry of the period of one year falls in between 1st of January to the 30th of June, the authorisation shall be valid till 30th of June and if the expiry of the period of one year falls in between 1st of July to the 31st of December, the authorisation shall be valid till 31st of December. 

During this period, if the Professional member attains the age of seventy, the authorization of assignment shall be valid until such date.

Click here to view the IBBI Notification on Insolvency and Bankruptcy Board of India (Model Bye-Laws and Governing Board of Insolvency Professional Agencies) (Amendment) Regulations, 2024.

Insolvency and Bankruptcy Board of India (“IBBI”) notifies the Insolvency and Bankruptcy Board of India (Insolvency Professionals) (Amendment) Regulations, 2024 (“Regulations”)

An insolvency professional (“IP”) is now allowed to resign from the assignment, subject to the recommendation of the committee of creditors in a corporate insolvency resolution process, consultation committee in liquidation process, the debtor or the creditor in the insolvency resolution process of personal guarantor to the corporate debtor, as the case may be, and the approval of the Adjudicating Authority. 

The IP shall however, continue to discharge his duties, functions and responsibilities till approval of the resignation by the Adjudicating Authority. An insolvency professional is not allowed to engage or appoint any of his relatives or related parties, for or in connection with any work relating to any of his assignment. However, the insolvency professional which is an insolvency professional entity may engage or appoint its partners or directors, as the case may be, for or in connection with any work relating to any of its assignment other than work related to valuation and audit of the debtor. 

Further, an insolvency professional shall not provide any service for or in connection with the assignment which is being undertaken by any of his relatives or related parties. However, the insolvency professional which is an insolvency professional entity may provide any service, other than service related to valuation and audit, for or in connection with the assignment which is being undertaken by any of its partners or directors, as the case may be.

Click here to view the IBBI Notification on Insolvency and Bankruptcy Board of India (Insolvency Professionals) (Amendment) Regulations, 2024.