IBBI Directs Liquidator To Make Certain Declaration When Financial Service Provider Undergoes Voluntary Liquidation

The Insolvency and Bankruptcy Board of India (“IBBI”) has issued a circular dated 13.02.2024, intimating that when a Financial Service Provider undergoes voluntary liquidation under IBC, then the Liquidator shall declare that: (i) the category of Financial Service Providers has been notified by the Central Government under Section 227 of IBC, and (ii) the corporate person has obtained prior permission from the appropriate regulator. Brief Background The Insolvency and Bankruptcy Code, 2016 (“IBC”) provides for the voluntary liquidation process of corporate persons. However, the definition of 'corporate person' in Section 3(7) of IBC excludes any Financial Service Provider (FSP). Section 227 read with the Insolvency and Bankruptcy (Insolvency and Liquidation Proceedings of Financial Service Providers and Application to Adjudicating Authority) Rules, 2019 allows FSPs who have been notified by the Central Government, after consulting financial regulators, to undergo a voluntary liquidation process after obtaining prior permission of the appropriate regulator. It has been noted that some FSPs have commenced the voluntary liquidation process without notification and / or prior permission of the appropriate financial regulator. Compliances for initiation of Voluntary Liquidation of a Financial Service Provider The IBBI has directed that the liquidators to ensure that if the corporate person falls under the category of financial service provider, it shall declare that: (i) the category of Financial Service Providers has been notified by the Central Government under section 227 of IBC, and (ii) the corporate person has obtained prior permission from the appropriate regulator. Sharing of final report, Form H, and dissolution order with IBBI The IBBI has directed that the liquidator shall submit a copy of Form H and the final report filed before the Adjudicating Authority as per Regulation 38, and the order for dissolution to the Board to the email ID: liqvol@ibbi.gov.in Ref. No. IBBI/LIQ/67/2024 Click Here To Read/Download Circular

IBBI Directs Liquidator To Make Certain Declaration When Financial Service Provider Undergoes Voluntary Liquidation

Pallavi Mishra

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