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Amendments in the IBBI (Insolvency Resolution Process for Corporate Persons), 2016 introduced on 15.02.2024

Amendments in the IBBI (Insolvency Resolution Process for Corporate Persons), 2016 introduced on 15.02.2024

This article has been authored by Suman Kumar Jha (Founding & Managing Partner), Afnaan Siddiqui (Co-Founder & Partner), Visakha Raghuram (Associate) & Harsh Kshitij.


On February 15, 2024, the Insolvency and Bankruptcy Board of India (IBBI) introduced certain significant amendments to the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 through the IBBI(Insolvency Resolution Process for Corporate Persons) (Amendment) Regulations, 2024. These changes responded to difficulties encountered in the resolution process, as recognized in prior discussion papers published on 1st November, 2023 and 6th November, 2023.

Mandate for Separate Bank Accounts in Real Estate Projects (Regulation 4D)

The amendments introduce Regulation 4D which mandates separate Bank Accounts for each real estate project undertaken by a corporate debtor to improve transparency and accountability in its resolution process . Regulation 4D requires the interim resolution professional (IRP) or resolution professional (RP) to operate distinct bank accounts for each real estate project undertaken by a corporate debtor.

Frequency of Committee of Creditors (CoC) Meetings (Regulation 18(1))

Another key amendment relates to the frequency of Committee of Creditors (CoC) meetings. Prior to this amendment, the meetings of the CoC were convened at the discretion of the RP. The substituted Regulation 18(1) now states the RP must hold CoC meetings within 30 days of the previous one. The CoC can extend this interval but must convene at least one meeting per quarter. This amendment seeks to ensure timely decision-making by the CoC.

Enhanced Voting Procedures (Regulation 25(5)(b))

Amendment to Regulation 25(5)(b) states that the voting shall be kept open from the circulation of minutes till such time as may be decided by the CoC which shall not be less than 24 (Twenty Four) hours but shall not exceed seven days. Earlier, the upper cap of seven days was not stated in the regulation. Therefore, this amendment prevents undue delay in the voting process by placing an upper cap on the voting period. However, an extension period has also been introduced whereby upon request by a creditor, the voting period may be introduced in increments of twenty-four hours. However, the RP cannot unnecessarily prolong voting once a majority decision is reached.

Increased CoC Oversight in Cost Approval (Regulation 31B)

The amendments also strengthen CoC oversight during the insolvency resolution process. Regulation 31B now necessitates updating the CoC members of the operational status of the Corporate Debtor and mandates CoC approval for all costs incurred, enhancing transparency and control over expenses.

Fair Value and Liquidation Value Determination (Regulation 35)

The RP must now facilitate discussions between registered valuers and the CoC to explain valuation methodologies used for computing fair value and liquidation value of assets of the Corporate Debtor. Valuation reports, fair and liquidation values, must be shared with all CoC members upon receipt of a confidentiality undertaking from the member of the CoC.

Transparency Enhancements in Information Memorandum and Project-Wise Resolution Plan Invitations (Regulation 36(2)(ka) and 36A)

Regulation 36(2)(ka) was introduced, mandating that the fair value of the assets of the Corporate Debtor be disclosed in the Information Memorandum. However, if it is against the interests of the CIRP Process, then the fair value may be omitted to be mentioned for reasons to be stated in writing.

Further, a clarification was introduced in Regulation 36A stating that project-wise resolution plans may be sought for corporate debtors having real estate projects. However, this shall require the approval of the CoC.

Inclusion of Monitoring Committee Details in Resolution Plans (Regulation 38(4) and (5))

Regulation 38(4) and (5) was introduced, allowing the CoC to consider the requirement of a monitoring committee for the implementation of the resolution plan. Liberty is also given to the CoC to constitute the monitoring committee having the RP or any other insolvency professional as its members. This amendment increases oversight on the implementation of resolution plans.

Clarification of RP Responsibilities During Regulatory Proceedings (Regulation 40)

Finally, Regulation 40 clarifies that the RP’s responsibilities continue when an application for extension of the CIRP Process is pending before the Adjudicating Authority (AA). This amendment ensures continuity in resolution activities during such regulatory proceedings.

These amendments demonstrate IBBI’s commitment to addressing challenges in corporate insolvency, particularly real estate, by enhancing transparency, accountability, and efficiency in the resolution process. The changes seek to improve creditor oversight, streamline decision-making, and promote timely resolution outcomes.


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