The Insolvency and Bankruptcy Board of India (IBBI) has amended norms pertaining to insolvency resolution process for corporate persons and liquidation process.
The amendments specify the process for withdrawal of applications before constitution of Committee of Creditors (CoC) and other scenarios. The changes are also with regard to withdrawal of application after constitution of CoC but before issue of invitation for expression of interest, and after issue of invitation for expression of interest.
With the latest changes, CoC has to approve a plan providing for contribution for meeting the liquidation costs, recommend sale of the corporate debtor or sale of business of the corporate debtor as a going concern, and decide the fee payable to liquidator, according to an official release issued on Friday.
Regarding liquidation process, the amendments specify the process for sale of corporate debtor as going concern and sale of business of corporate debtor as going concern under liquidation.
"These also provide that where a corporate debtor is sold as a going concern, the liquidation process shall be closed without dissolution of the corporate debtor," the release said.
Further, liquidation process has to be completed within one year of its commencement, notwithstanding pendency of applications for avoidance transactions.
Under the amended norms, financial creditors, who are financial institutions, would be required to contribute towards the liquidation cost, subject to certain conditions.
"The amendments provide for constitution of a Stakeholders' Consultation Committee having representation from secured financial creditors, unsecured financial creditors, workmen and employees, government, other operational creditors, and shareholder/ partners to advice the liquidator on matters relating to sale.
"However, the advice of this committee is not binding on the liquidator," the release said.