IBBI amends rules for corporate resolution, voluntary liquidation process

The Insolvency and Bankruptcy Board of India (IBBI) has amended regulations pertaining to resolution process for corporate persons as well as voluntary liquidation.

The Insolvency and Bankruptcy Code (IBC) envisages appointment of an authorised representative by the adjudicating authority to represent financial creditors in a class, like allottees under a real estate project, in the Committee of Creditors (CoC).

In this regard, regulations require the interim resolution professional to offer a choice of three insolvency professionals in the public announcement, and the creditors in a class to choose one of them to act as their authorised representative.

The latest amendments provide that the three insolvency professionals offered by the interim resolution professional "must be from the State or Union Territory, which has the highest number of creditors in the class as per records of the corporate debtor," an official release said on Friday.

Further, an authorised representative should seek voting instructions only after circulation of minutes of meeting and vote accordingly.

"He shall, however, circulate the agenda, and may seek preliminary views of creditors in the class before the meeting, to enable him to effectively participate in the meeting," the release said.

Citing the amendment, the release said that after evaluation of all compliant resolution plans as per the evaluation matrix, the CoC should vote on all compliant resolution plans simultaneously.

"The resolution plan, which receives the highest votes, but not less than sixty-six percent of voting share, shall be considered as approved," it added.

With regard to voluntary liquidation process also, certain amendments have been effected.

Now, a corporate person "may replace the liquidator by appointing another insolvency professional as liquidator by a resolution of members or partners, or contributories, as the case may be", the release said.