IBBI proposes mandatory recording of CoC bidder eligibility in CIRP

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The IBBI has proposed making it mandatory for the committee of creditors (CoC) to formally record its deliberations on the eligibility of resolution applicants under Section 29A of the IBC Code aimed to enhance transparency in the corporate insolvency resolution process (CIRP).

Section 29A of the Insolvency and Bankruptcy Code (IBC) lays down the ineligibility criteria for persons who can submit a resolution plan for a corporate debtor undergoing the insolvency process.

Provisions under the section prevent certain individuals and entities from acquiring or taking control of a stressed company if they have a history of defaults, financial irregularities, or criminal activity.

The proposed amendment to CIRP norms will require such discussions to be documented in meeting minutes, based on due-diligence reports, affidavits from applicants, and other information in the resolution plan, according to a release.

The board said the move will improve transparency, reduce litigation and strengthen diligence in the resolution process.

The second proposal in the paper relates to enhanced disclosures under Section 32A of the Code, which grants immunity to the corporate debtor and its assets from prosecution for offences committed before the insolvency process, provided there is a change in management to an eligible party.

To ensure that ultimate beneficiaries are clearly identified, the Insolvency Bankruptcy Board of India (IBBI) has suggested mandating a statement of beneficial ownership in resolution plans, covering details of all natural persons with ultimate control, shareholding structures, and jurisdictions of intermediate entities.

Resolution applicants also need to file an affidavit confirming their eligibility for Section 32A immunity.

The insolvency regulator also seeks to extend the digitalisation of insolvency proceedings by mandating that invitations for and submissions of resolution plans be made exclusively through an IBBI-recognised electronic platform.

The board said the success of a similar system for liquidation auctions, implemented from April 2025, along with recommendations from parliamentary committees and expert bodies, underlines the need for a secure, centralised submission system to improve confidentiality, fairness and efficiency.

The IBBI has invited public comments on the proposals until August 27.