Fee Payable To Insolvency Professional ; IBBI Notifies Third Amendment To CIRP Regulations

The Insolvency and Bankruptcy Board of India ("IBBI") has amended the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 ("CIRP Regulations") for a third time and has notified the amendment on 13.09.2022. The amendment has introduced Clause 34B and Schedule II to the CIRP Regulations which have brought about the following changes: The fee of the interim resolution professional or the resolution professional, appointed on or after 1st October 2022 shall be decided by the applicant or committee in accordance with the said amendment regulations. An insolvency professional shall be paid minimum fixed fee in the range of One Lakh Rupees to Five Lakh Rupees, per month, depending on the quantum of claims admitted, as specified under Table-1 of Schedule-II of the said amendment regulations. However, the applicant or committee may decide to fix higher amount of fees than the said minimum fixed fee, after taking into consideration market factors such as size and scale of business operations of corporate debtor, business sector in which corporate debtor operates, level of operating economic activity of corporate debtor and complexity related to process. For the resolution plan approved by the committee on or after 1st October 2022, the committee may decide to pay, after approval of such resolution plan by the Adjudicating Authority on commencement of payment to creditors by the resolution applicant, performance-linked incentive fee, not exceeding a total of five crores of rupees; a. for timely submission of resolution plan to the Adjudicating Authority, as specified under Table-2 of Schedule-II to the said amendment regulations, and/or b. for value maximisation, at the rate of one per cent of the amount by which the realisable value is higher than the liquidation value, or c. other than a. or b. above, as the committee may deem necessary. The fee under amendment regulation may be paid from the funds, available with the corporate debtor, contributed by the applicant or members of the committee and/or raised by way of interim finance and the same shall be included in the insolvency resolution process cost. Detailed Overview In exercise of the powers conferred by clauses (aa) and (t) of sub-section (1) of Section 196 read with section 240 of the Insolvency and Bankruptcy Code, 2016 (31 of 2016), the IBBI made the following regulations further to amend the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016, namely: - These regulations may be called the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) (Third Amendment) Regulations, 2022. They shall come into force on the date of their publication in the Official Gazette. In the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 (hereinafter referred to as 'the principal regulations'), the word "Schedule" shall be substituted with the word and mark "Schedule-I", wherever it is appearing. 3. In the principal regulations, after regulation 34A, the following regulations shall be inserted, namely:- "34B. Fee to be paid to interim resolution professional and resolution professional. (1) The fee of interim resolution professional or resolution professional, under regulation 33 and 34, shall be decided by the applicant or committee in accordance with this regulation. (2) The fee of the interim resolution professional or the resolution professional, appointed on or after 1st October 2022, shall not be less than the fee specified in clause 1 for the period specified in clause 2 of Schedule-II: Provided that the applicant or the committee may decide to fix higher amount of fee for the reasons to be recorded, taking into consideration market factors such as size and scale of business operations of corporate debtor, business sector in which corporate debtor operates, level of operating economic activity of corporate debtor and complexity related to process. (3) After the expiry of period mentioned in clause 2 of Schedule-II, the fee of the interim resolution professional or resolution professional shall be as decided by the applicant or committee, as the case may be. (4) For the resolution plan approved by the committee on or after 1st October 2022, the committee may decide, in its discretion, to pay performance-linked incentive fee, not exceeding five crore rupees, in accordance with clause 3 and clause 4 of Schedule-II or may extend any other performance linked incentive structure as it deems necessary. (5) The fee under this regulation may be paid from the funds, available with the corporate debtor, contributed by the applicant or members of the committee and/or raised by way of interim finance and shall be included in the insolvency resolution process cost." In the principal...

Fee Payable To Insolvency Professional ; IBBI Notifies Third Amendment To CIRP Regulations

Pallavi Mishra

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