Insolvency resolution professionals will now be required to assess the fair value and liquidation value of the entity undergoing insolvency proceedings, with the latest set of amendments to the regulations.
The Insolvency and Bankruptcy Board of India (IBBI) has amended the norms pertaining to insolvency resolution process for corporate persons.
Under the revised framework, the resolution plan -- approved by the committee of creditors -- should be submitted 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".
An official release today said the norms have been amended wherein the resolution professional should 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," it said.
Further, the resolution professional should submit the information memorandum in electronic form to each member of the committee of creditors within two weeks of appointment.
Once an invitation, including the evaluation matrix, is issued to a prospective resolution applicant, the latter would have a minimum of 30 days to submit the resolution plan.
According to the release, the resolution applicant would continue to specify the sources of funds that would be used to pay insolvency resolution process costs, liquidation value due to operational creditors and liquidation value due to dissenting financial creditors.
However, the committee of creditors would specify the amounts payable from resources under the resolution plan for these purposes, it added.
"A resolution plan shall provide for 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 release said.
The IBBI is implementing the Insolvency and Bankruptcy Code (IBC) which provides for time bound and market-determined resolution process.
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