IBBI proposes reducing compliance burden, simplifying forms for RPs

Looks to simplify forms submitted for corporate insolvency resolution process

The Insolvency and Bankruptcy Board of India (IBBI) has proposed to simplify the forms submitted for the corporate insolvency resolution process (CIRP) by resolution professionals (RPs).

The changes, proposed in a discussion paper released earlier this week, follow the suggestion of the Financial Stability and Development Council (FSDC) to ease compliance burden.

The move is to avoid duplication and streamline formalities undertaken by RPs. For instance, the IBBI has proposed to move to a monthly compliance reporting framework where insolvency professionals would report the status and progress of the CIRP as on the last day of every month, by filing the applicable forms by 10th day of the following month.

Currently, the timelines for filing CIRP forms are linked to different events, such as the insolvency commencement date, public announcement, appointment of RPs, issue of information memorandum. This, IBBI said, leads to due dates for filing of forms falling on different dates for an insolvency professional handling multiple CIRP assignments, making the filing process cumbersome.

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Certain forms, such as the pre assignment form and CIRP Form-6, which details interim finance, commencement of insolvency resolution process of guarantors of the company, have been proposed to be eliminated by the IBBI. This is being done since relevant details are captured in other forms, the insolvency regulator said.

“Excessive supervision and information requests negatively impact the professionals’ work and incur time and costs. IPs are overburdened with compliance requirements, including submitting periodical progress reports to NCLTs while managing the CIRP and liquidation processes,” said Mukesh Chand, senior counsel, Economic Laws Practice.  

The revised forms and filing timelines, the IBBI said, aim to minimise duplicate submissions, auto-populate fields from existing data to the extent possible, seek information relevant to the stage of CIRP and streamline the compliance process. “This will help reduce the time and effort required for compliance by insolvency professionals,” IBBI’s discussion paper said. 

Experts said there was a need to shift to automated data and information management systems. “While consolidating and revamping forms is beneficial, the real issue is how this massive data is being utilised to bring about changes and identify the real causes of delays in the CIRP and liquidation processes,” Chand said.  

The proposed amendments are expected to make the process less stringent for the insolvency professionals and resolve the complexities.  

“The single form approach will effectuate ease of process and help stay focused on the bottom line which is that there must be effective and fruitful corporate resolution,” said Jasmine Damkewala, senior partner, Circle of Counsels.