IBBI plans to reduce timelines under voluntary liquidation process

The Insolvency and Bankruptcy Board of India (IBBI) has proposed amendments to regulations governing the voluntary liquidation process to reduce timelines, including bringing down the period for preparation of list of stakeholders by the liquidator to 15 days.

Besides, IBBI is looking to amend regulations related to compliance certificate under the voluntary liquidation process.

In this regard, a discussion paper has been issued and comments have been sought from the stakeholders till February 22.

"The proposed amendments by curtailing the unwarranted time spent on various activities aim to ensure early completion of voluntary liquidation process, thereby, provide quicker exit for the corporate person, release the idle resources faster, and put them into productive uses," IBBI said.

In cases where no claims are received from the creditor(s), the period for preparation of list of stakeholders by liquidator may be reduced to 15 days from the last date for receipt of claims, as per the discussion paper.

Another proposal is that the period for distribution of proceeds from realisation to the stakeholders may be reduced from the current six months to 30 days from the receipt of the amount.

According to the discussion paper, the final report in cases where no claims are received from any creditor(s), may be provided in 90 days from the date of commencement of the process.

Regarding cases where claims are received from creditor(s), the discussion paper said the period for submission of final report may be provided as 270 days from the date of start of the process.

"Therefore, the liquidator shall submit the final report, along with the application for dissolution, to the AA (Adjudicating Authority) within ninety days or two hundred and seventy days, as the case may be, from the liquidation commencement date," it noted.

On the lines of compliance certificate provided under CIRP (Corporate Insolvency Resolution Process) Regulations and Liquidation Regulations, IBBI said it is proposed that a similar compliance certificate/ checklist may be introduced for voluntary liquidation process, to be submitted along with the final report to the AA.

"The proposed amendment would assist the AA to process the dissolution applications expeditiously and ensure consistency across its benches. This would facilitate in saving of precious judicial time and resources and thus, reduce the overall burden on the AA.

"... the presentation of the key details of the voluntary liquidation process in a summary format would form a rich and systemic source of data for analysis by the Board/ Government," the discussion paper said.