Centre amends norms of corporate insolvency resolution process

The Insolvency and Bankruptcy Board of India (IBBI) on Wednesday issued amendments to the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016, effective today.

The amendments, highlighted in a notice issued by the Ministry of Corporate Affairs noted that a resolution professional shall appoint two registered valuers to determine the fair value and the liquidation value of the corporate debtor. After the receipt of resolution plans, the resolution professional shall provide the fair value and the liquidation value to each member of the committee of creditors in electronic form, on receiving a confidentiality undertaking. The resolution professional and registered valuers, however, must maintain confidentiality of the fair value and the liquidation value.

Furthermore, the official is required to submit the information memorandum in electronic form to each member of the committee of creditors within two weeks of his appointment as resolution professional and to each prospective resolution applicant latest by the date of invitation of resolution plan, on receiving confidentiality undertaking.

He/She must also issue an invitation, including the evaluation matrix, to the prospective resolution applicants. However, the prospective resolution applicant shall get at least 30 days from the issue of invitation or modification thereof, whichever is later, to submit resolution plans. Similarly, he will get at least 15 days from the issue of evaluation matrix or modification thereof, whichever is later, to submit resolution plans.

"An abridged invitation shall be available on the web site, if any, of the corporate debtor, and on the web site, if any, designated by the IBBI for the purpose," the ministry said.

While the resolution applicant continues to specify the sources of funds that will be used to pay insolvency resolution process costs, liquidation value due to operational creditors and liquidation value due to dissenting financial creditors, the IBBI noted that the committee of creditors must specify the amounts payable from resources under the resolution plan for these purposes.

The board also called for a resolution plan with the measures, as may be necessary, for insolvency resolution of the corporate debtor for maximisation of value of its assets. These may include reduction in the amount payable to the creditors, extension of a maturity date or a change in interest rate or other terms of a debt due from the corporate debtor, change in portfolio of goods or services produced or rendered by the corporate debtor, and change in technology used by the corporate debtor.

The resolution professional, the ministry said, must submit the resolution plan approved by the committee of creditors to the adjudicating authority, at least 15 days before the expiry of the maximum period permitted for the completion of the corporate insolvency resolution process.