The Insolvency and Bankruptcy Board of India ("IBBI") on 16.09.2022 has notified amendments to the IBBI (Voluntary Liquidation Process) Regulations, 2016 ("Voluntary Liquidation Regulations") and IBBI (Liquidation Process) Regulations, 2016 ("Liquidation Regulations") for a second time. These amended Regulations have come into force on 16.09.2022.
In exercise of the powers conferred by Section 196(1)(t) read with Section 240 of the Insolvency and Bankruptcy Code, 2016, the IBBI has introduced the following amendments to the Voluntary Liquidation Regulations and Liquidation Process regulations:
- To enable better participation of stakeholders and streamline the liquidation process to reduce delays and realize better value, the amendment in Liquidation Regulations make the following major modifications:
- The Committee of Creditors (CoC) constituted during Corporate Insolvency Resolution Process (CIRP) shall function as Stakeholders Consultation Committee (SCC) in the first 60 days. After adjudication of claims and within 60 days of initiation of process, the SCC shall be reconstituted based upon admitted claims.
- The liquidator has been mandated to conduct the meetings of SCC in a structured and time bound manner with better participation of stakeholders.
- The scope of mandatory consultation by liquidator, with SCC has been enlarged. Now, SCC may even propose replacement of liquidator to the Adjudicating Authority (AA) and fix the fees of liquidator, if the CoC did not fix the same during CIRP.
- If any claim is not filed during liquidation process, then the amount of claim collated during CIRP shall be verified by the liquidator.
- Wherever the CoC decides that the process of compromise or arrangement may be explored during liquidation process, the liquidator shall file application only in such cases before Adjudicating Authority for considering the proposal of compromise or arrangement, if any, within thirty days of the order of liquidation.
- Specific event-based timelines have been stipulated for auction process.
- Before filing of an application for dissolution or closure of the process, SCC shall advice the liquidator, the manner in which proceedings in respect of avoidance transactions or fraudulent or wrongful trading, shall be pursued after closure of liquidation proceedings.
- The Amendment Liquidation Regulations and Amendment Voluntary Liquidation Regulations further lay down the manner and period of retention of records relating to liquidation and voluntary liquidation of a corporate debtor or corporate person, respectively.
Notification No.: IBBI/2022-23/GN/REG095 and No. IBBI/2022-23/GN/REG094