We bring to your attention the recent and noteworthy amendments introduced by the Insolvency and Bankruptcy Board of India (IBBI) through the “IBBI (Insolvency Resolution Process for Corporate Persons) (Second Amendment) Regulations, 2023.” These amendments, detailed below, aim to streamline various aspects of the insolvency resolution process, ensuring greater efficiency, transparency, and cooperation among stakeholders.
1. Assistance and Cooperation by Corporate Debtor (CD) Personnel (Amendment [Reg. 3A]): The amendments mandate CD’s management and promoters to hand over assets and records as per the list prepared by the Resolution Professional (RP) in cases where the CD fails to do so. The RP can requisition any necessary assets or information, ensuring a smoother process.
2. Modification of Timelines for Submission and Verification of Claims (Amendment [Reg. 12(1); 13(1A), (1B), (1C)]): The timeline for claim submission has been extended to 90 days from the insolvency commencement date or the date of issue of the latest Request for Resolution Plan (RFRP), whichever is later. Late claims, if submitted with valid reasons, can also be considered, reducing uncertainty and delays.
3. Increase in Duties of Authorized Representatives (ARs) (Amendment [Reg. 16A(10)]): ARs now play a pivotal role in helping the creditors in class (CIC) understand Committee of Creditors (CoC) meeting discussions, evaluate resolution plans, facilitate communication with the RP, represent CIC in legal interactions, craft marketing strategies, and suggest plan modifications. Their enhanced role ensures comprehensive representation and informed decision-making.
4. Increase in Fee of AR and Replacement of AR (Amendment [Reg. 16A(3A), (3B)]): Due to their expanded roles, ARs will receive revised fees. Additionally, creditors now have the power to replace an AR through a democratic process, ensuring efficient representation aligned with creditors' interests.
5. Audit Requirement in Certain CIRPs (Amendment [Reg. 30B]): The CoC can propose an audit, specifying its scope, objectives, estimated costs, and proposed auditor. This ensures accountability and boosts stakeholders' confidence. The auditor must be an Insolvency Professional and submit the audit report to the CoC after RP's comments.
6. Changes in Timelines and Forms (Amendment [Reg. 40A; Schedule-I, Form G, Form H]): Timelines for the submission of the Information Memorandum (IM) and RFRP have been clarified, avoiding confusion. Forms G and H have been updated to include relevant information and minutes of CoC meetings, ensuring transparency and understanding.
7. Providing Details of Debt, Default, and Limitation in Admission Application (Amendment [Reg. 2D]): New Regulation 2D mandates the submission of evidence and a chronology of debt and default, including acknowledgment of debt and applicable limitations. This clarity reduces disputes and saves valuable AA time.
8. Timeline for Providing Information for Assignment of Debt (Amendment [Reg. 28(1)]): Creditors now must intimate the IRP/RP about the assignment or transfer of debt within seven days, ensuring a smooth CoC meeting process.
These amendments reflect IBBI’s commitment to fostering a robust and responsive insolvency framework. We believe these changes will enhance the efficiency, transparency, and fairness of the insolvency resolution process, benefiting all stakeholders involved.