CAIRR Update September 19, 2023

19/09/2023

Summary of the IBBI notifications dated 18/09/2023.

This circular is integrated in our free-to-use website ca2013.com.

IBBI Notifies Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) (Second Amendment) Regulations, 2023 & Insolvency and Bankruptcy Board of India (Model Bye-Laws and Governing Board of Insolvency Professional Agencies) (Amendment) Regulations, 2023.

IBBI through the notification dated 18/09/2023 amends the existing Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 and Insolvency and Bankruptcy Board of India (Model Bye-Laws and Governing Board of Insolvency Professional Agencies) Regulations, 2016. The key highlights of the notification are as below:

Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) (Second Amendment) Regulations, 2023

1. While filing an application under section 7 or 9, the financial creditor/operational creditor shall also submit along with evidence, chronology of the debt and default including the date when the debt became due, date of default, dates of part payments & the date of last acknowledgment of debt and the limitation applicable.
2. Insertion of Regulation 3A: Assistance and Co-operation by the personnel of corporate Debtor:
   – The interim resolution professional(‘IRP’) or resolution professional(‘RP’), as the case may be, shall take custody and control from the personnel of the corporate debtor, its promoters management with respect to the records of information of the assets, finances and operations of the corporate debtor.
   – The personnel of the corporate debtor as referred above, shall hand over a list of assets and records while handing over their custody and control to the Resolution Professional and he shall identify person in whose possession these assets and records will be held and where such list has not been handed over, the RP shall himself prepare a list of assets and records. He shall also requisition the information relating to the assets, finances and operations of the corporate debtor referred in Section 18(a), 18(f) and such information required under regulation 36 which were required to be maintained by the corporate debtor but have not yet been handed over.
   – Each list of assets and records shall be signed by the parties present and by at least two individuals who have witnessed the act of taking control and custody of such assets and records.
   – An application made under in respect of failure to provide any asset or record as requisitioned under the Code and this regulation, shall show presence of such asset or record in the notice of requisition and absence of such asset or record in the list of assets and records taken in control and custody.
3. The timeline for the submission of the proof of claims by the creditors who fails to submit claim with proof within the time stipulated in the public announcement, has been revised. The creditor, may now submit his claim with proof to the IRP/RP, as the case may be, up to the date of issue of request for resolution plans or ninety days from the insolvency commencement date, whichever is later and the creditor shall provide reasons for delay in submitting the claim beyond the period of ninety days from the insolvency commencement date.
4. Where the IRP/RP, does not collate the claim after verification, he shall provide reasons for the same and in the event that claims are received after the date mentioned in the Public Announcement and up to seven days before the date of meeting, the IRP/RP, shall verify all such claims and categorise them as acceptable or non-acceptable for collation and shall  intimate the creditors regarding the reasons of  such categorization within 7 days. Additionally, he shall put up the claims categorised as acceptable to him to the committee in its next meeting for its recommendation for inclusion in the list of creditors and its treatment in the resolution plan and submit such claims before the Adjudicating Authority for condonation of delay and adjudication wherever applicable.
5. The financial creditors in a class, representing not less than 10% voting share may seek replacement of the authorised representative with an insolvency professional of their choice by making a request to the IRP/RP who shall announce a voting window open for at least twenty-four hours. He shall offer the choice of at least 3 Insolvency Professionals to the financial creditors along with the existing authorised representative and shall further apply to the adjudicating authority for appointment of the authorised representative who receives the highest percentage of voting share of financial creditors in that class.
6. The notification also provides for revised fees to be paid to the authorized representative of the creditors per meeting of the committee attended by him and has introduced fees payable to the authorised representative per meeting of the creditors convened by him. In addition to this, responsibilities of the authorised representative have been provided for.
   The payment of fee to authorised representative shall be part of insolvency resolution process cost in respect of two meetings with the creditors he represents and the fee for any additional meeting beyond two shall be part of insolvency resolution process cost subject to approval of committee of creditors.
7. In the event a creditor assigns or transfers the debt due to such creditor to any other person during the insolvency resolution process period, the terms of such assignment or transfer and the identity of the assignee or transferee shall be provided to the IRP/RP within seven days.
8. A provision for the Audit of the debtor has been introduced wherein any member of the committee may propose an audit of the corporate debtor along with the objectives, scope, estimate of the costs, timeframe, and names of the proposed auditor. If approved by the committee, the audit shall be conducted by an insolvency professional having qualifications required for such audit and he shall prepare a report detailing his findings and same shall be presented before the committee.

Insolvency and Bankruptcy Board of India (Model Bye-Laws and Governing Board of Insolvency Professional Agencies) Regulations, 2023

1. An individual or an insolvency professional entity may apply for enrolment as a professional member by applying in Part–I of Form A and Part–I of Form AA, respectively, of the Second Schedule to IBBI (Insolvency Professionals) Regulations, 2016, in such manner and with such fees as may be specified by the Agency and the acceptance of the application shall be communicated to the applicant, along with a certificate of membership within sixty days of receipt of the application.
2. The Agency may refuse to accept the surrender of membership by any professional member if there is grievance or disciplinary proceeding pending against it before the Agency or the Board or it does not comply with requirements, as on the date of application for surrender of professional membership as enumerated in the Schedule or it has been appointed as an interim resolution professional, resolution professional, liquidator or authorised representative or bankruptcy trustee for a process under the Code, or the appointment of another insolvency professional may be detrimental to such process.
3. Grounds for expulsion of the member have been amended for the agency to additionally consider factors provided in clause 29 of the Schedule.

Click here to view the IBBI (Insolvency Resolution Process for Corporate Persons) (Second Amendment) Regulations, 2023.

Click here to view the IBBI (Model Bye-Laws and Governing Board of Insolvency Professional Agencies) (Amendment) Regulations, 2023.