IBBI amends rules to enhance creditor representation in insolvency process

The IBBI has amended the Insolvency Resolution Process for Corporate Persons norms to introduce significant changes to enhance creditor representation in the insolvency process.

The board notified the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) (Second Amendment) Regulations 2024 on September 24.

"The amendment regulations provide for the appointment of an interim representative who will act as a representative for a class of creditors during the period when the application for appointment of the authorised representative is under consideration of the adjudicating authority for approval," IBBI said in a release.

The interim representative will have the same rights and responsibilities as a duly appointed authorised representative, particularly in the meetings of the committee of creditors.

This move is aimed at facilitating the effective representation of creditors that are large in number, such as homebuyers, who often face delays and complications during the insolvency process.

The amended regulations are effective from September 24, the board said.

The corporate insolvency resolution process (CIRP) has been a crucial mechanism under the Insolvency and Bankruptcy Code (IBC) for resolving insolvency issues in India.

With these changes, IBBI has taken a proactive step to ensure that large creditor groups are not left behind in the insolvency resolution process, maintaining the overall efficiency and fairness of the IBC framework.

The Insolvency and Bankruptcy Board of India (IBBI) is a statutory body functioning under the corporate affairs ministry.